THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

RIVERSIDE 

GIFT  OF 

Dr.  Gordon  tatkins 


RECENT 


ECONOMIC  CHANGES 


AND  THEIE  EFFECT  ON 

THE  PRODUCTION  AND  DISTRIBUTION  OF  WEALTH 
AND  THE  WELL-BEING  OF  SOCIETY 


BY 
DAVID  A.  WELLS,  LL.  D.,  D.  C.  L. 

MKMHHK  CORRESPONDANT  DK  L'lNSTITUT  DK  FRANCE  ;   CORRESPONDENTS 

KE01A    ACCADEMIA    DEI      LINCEI,    ITALIA  ;    HONORARY    FELLOW 

ROYAL,   STATISTICAL  SOCIETY,  O.  B.  ;   LATE  UNITED  STATES 

SPECIAL  COMMISSIONER  OF   REVENUE,  AND  PRESIDENT 

AMERICAN  SOCIAL  SCIENCE  ASSOCIATION,  ETC. 


YORK 

D.    APPLETON    AND    COMPANY 
1889 


COPYRIGHT,  1889, 
Br  D.  APPLETON  AND  COMPANY. 


All  rights  reserved. 


TO 
D.  WILLIS  JAMES, 

THE  ENTERPRISING  AND   SUCCESSFUL  MERCHANT, 

THE   PUBLIC-SPIRITED  CITIZEN, 

THE  WISE  AND   GENEROUS   PHILANTHROPIST, 

THIS  VOLUME   IS   RESPECTFULLY 


BY  THE  AUTHOR. 


PREFACE. 


THE  economic  changes  that  have  occurred  during  the 
last  quarter  of  a  century — or  during  the  present  generation 
of  living  men — have  unquestionably  been  more  important 
and  varied  than  during  any  former  corresponding  period  of 
the  world's  history.  It  would  seem,  indeed,  as  if  the  world, 
during  all  the  years  since  the  inception  of  civilization,  has 
been  working  up  on  the  line  of  equipment  for  industrial 
effort — inventing  and  perfecting  tools  and  machinery,  build- 
ing workshops  and  factories,  and  devising  instrumentalities 
for  the  easy  intercommunication  of  persons  and  thoughts, 
and  the  cheap  exchange  of  products  and  services ;  that  this 
equipment  having  at  last  been  made  ready,  the  work  of 
using  it  has,  for  the  first  time  in  our  day  and  generation, 
fairly  begun ;  and  also  that  every  community  under  prior 
or  existing  conditions  of  use  and  consumption,  is  becoming 
saturated,  as  it  were,  with  its  results.^  As  an  immediate 
consequence  the  world  has  never  seen  anything  comparable 
to  the  results  of  the  recent  system  of  transportation  by  land 
and  water ;  never  experienced  in  so  short  a  time  such  an 
expansion  of  all  that  pertains  to  what  is  called  "  business  " ; 
and  has  never  before  been  able  to  accomplish  so  much  in 


vi  PREFACE. 

the  way  of  production  with  a  given  amount  of  labor  in  a 
given  time. 

Concurrently,  or  as  the  necessary  sequence  of  these 
changes,  has  come  a  series  of  wide-spread  and  complex  dis- 
turbances ;  manifesting  themselves  in  great  reductions  of  the 
cost  of  production  and  distribution  and  a  consequent  remark- 
able decline  in  the  prices  of  nearly  all  staple  commodities, 
in  a  radical  change  in  the  relative  values  of  the  precious 
metals,  in  the  absolute  destruction  of  large  amounts  of 
capital  through  new  inventions  and  discoveries  and  in  the 
impairment  of  even  greater  amounts  through  extensive 
reductions  in  the  rates  of  interest  and  profits,  in  the  dis- 
content of  labor  and  in  an  increasing  antagonism  of  nations, 
incident  to  a  greatly  intensified  industrial  and  commercial 
competition.  Out  of  these  changes  will  probably  come  fur- 
ther disturbances,  which  to  many  thoughtful  and  conserva- 
tive minds  seem  full  of  menace  of  a  mustering  of  the  bar- 
barians from  within  rather  than  as  of  old  from  without, 
for  an  attack  on  the  whole  present  organization  of  society, 
and  even  the  permanency  of  civilization  itself.  / 

The  problems  which  our  advancing  civilization  is  forc- 
ing upon  the  attention  of  society  are,  accordingly,  of  the 
utmost  urgency  and  importance,  and  are  already  occupying 
the  thoughts,  in  a  greater  or  less  degree,  of  every  intelligent 
person  in  all  civilized  countries.  But,  in  order  that  there 
may  be  intelligent  and  comprehensive  discussion  of  the 
situation,  and  more  especially  that  there  may  be  wise  re- 
medial legislation  for  any  economic  or  social  evils  that  may 
exist,  it  is  requisite  that  there  should  be  a  clear  and  full 
recognition  of  what  has  happened.  And  to  simply  and 
comprehensively  tell  this — to  trace  out  and  exhibit  in  some- 


PREFACE.  vii 

thing  like  regular  order  the  causes  and  extent  of  the  indus- 
trial and  social  changes  and  accompanying  disturbances 
which  have  especially  characterized  the  last  fifteen  or 
twenty  years  of  the  world's  history — has  been  the  main  pur- 
pose of  the  author.  At  the  same  time  the  presentation  of 
whatever  in  the  way  of  deduction  from  the  record  of  experi- 
ence has  seemed  legitimate  and  likely  to  aid  in  correct  con- 
clusions, has  not  been  disregarded. 

In  the  main  the  following  pages  are  a  reproduction  of  a 
series  of  papers  originally  contributed  to  and  published  in 
"  The  (New  York)  Popular  Science  Monthly,"  and  in  part 
in  "  The  (London)  Contemporary  Keview  "  (1887  and  1888). 
These  have,  however,  in  great  measure  been  rewritten,  care- 
fully revised,  and  brought  up  to  a  later  date. 

NORWICH,  CONNECTICUT,  August,  1889. 


CONTENTS. 


i. 

PAGE 

Economic  disturbances  since  1873 — Character  and  universality  of  such 
disturbances — Conditions  antecedent — Experience  of  Germany — Of 
the  United  States— Effect  of  crop  failures  in  Europe,  1879-' 81— Dis- 
turbances in  Great  Britain,  France,  Belgium,  Russia,  and  Spain — 
Chronological  presentation  of  industrial  experiences — Speculations 
as  to  causes — Tendency  to  magnify  local  influences — The  recognition 
of  a  cause  universal  in  its  influence  necessary  to  explain  a  universal 
phenomenon  ........  1 

II. 

The  place  in  history  of  the  years  from  1860  to  1885  inclusive — New  con- 
ditions of  production  and  distribution — The  prime  factors  of  eco- 
nomic disturbance — Illustrative  examples — The  Suez  Canal — Influ- 
ences of  the  telegraph  on  trade — Economy  in  the  construction  and 
management  of  vessels — Disappearance  of  the  sailing-vessel — Revo- 
lution in  the  carrying-trade  on  land — The  annual  work  service  of 
the  railroad — The  Bessemer  steel  rail — Future  supply  of  food  com- 
modities— Cheapening  of  iron — Displacement  of  labor  by  machinery 
— Natural  gas — Application  of  machinery  to  the  production  and 
transportation  of  grain — Adam  Smith  and  the  manufacture  of  pius — 
The  epoch  of  efficient  machinery  production — Influence  of  labor  dis- 
turbances on  inventions — Prospective  disturbing  agencies — Displace- 
ment of  the  steam-engine .  .  .  v .  .  .  .  .27 

III. 

Over-production — Periodicity  of  trade  activity  and  stagnation — Increase 
in  the  volume  of  trade  with  accompanying  decline  in  profits — De- 
pression of  agriculture  in  Europe — Changes  in  the  relations  of  labor 
and  capital — Destruction  of  handicrafts — Antagonisms  of  machinery 
— Experience  of  British  co-operative  societies — Influence  of  improve- 
ments in  production  by  machinery  on  international  differences  in 
wages — Changes  in  the  details  of  product  distribution — Changes  in 
retail  trade — Displacement  of  the  "  middle-man  "  «  .  .70 


X  CONTENTS. 

IV. 

PAOB 

Depression  of  prices  as  a  cause  of  economic  disturbance — Manifestations  of 
such  disturbances — Their  universality — Average  fall  in  prices  since 
1867-"T7 — Methods  of  determining  averages — Cause  of  the  decline — 
Two  general  theories — General  propositions  fundamental  to  inquiry — 
Eecent  production  and  price  experiences  of  staple  commodities — Sugar 
— Petroleum — Copper — Iron — Quicksilver — Silver — Tin — Tin-plate 
— Lead — Coal — Coffee  and  tea — Quinine — Paper  and  rags — Nitrate 
of  soda — Meat — Cheese — Fish — Freights — Wheat — Cotton — Wool — 
Silk — Jute — Conclusions  of  the  British  Gold  and  Silver  Commission  114 

V. 

Price  experience  of  commodities  where  product  has  not  been  greatly 
augmented — Handicraft  products — Prices  of  India  commodities — 
Exceptional  causes  for  price  changes — Coral,  hops,  diamonds,  hides, 
and  leather — Changes  in  supply  and  demand  regarded  by  some  as 
not  sufficiently  potential — Divergency  of  price  movements — Evidence 
from  a  gold  standpoint — Has  gold  really  become  scarce  ? — Gold  pro- 
duction since  1850 — Increase  in  the  gold  reserves  of  civilized  coun- 
tries— Economy  in  the  use  of  money — Clearing-house  experiences — 
Difference  between  gold  and  silver  and  other  commodities  in  respect 
to  use — Has  the  fall  in  prices  increased  the  burden  of  debts  ? — Curi- 
.ous  monetary  experiences  of  the  United  States  .  .  .  .191 

VI. 

Changes  in  recent  years  in  the  relative  values  of  the  precious  metals — 
Subject  not  generally  understood — Former  stability  in  the  price  of 
silver — Action  of  the  German  Government  in  1873 — Concurrent  de- 
cline in  the  price  of  silver — Action  of  the  "Latin  Union" — Influ- 
ence and  nature  of  India  "Council  bills" — Alleged  demonetization 
of  silver — Increased  purchasing  power  of  silver — Increased  product 
of  silver — Economic  disturbances  consequent  on  the  decline  of  silver 
— Increased  production  of  cotton  fabrics  in  India — Industrial  awak- 
ening in  India — Relation  of  the  decline  in  the  value  of  silver  to  the 
supply  of  India  wheat — International  trade,  a  trade  in  commodities 
and  not  in  money — Economic  disturbances  in  the  Dutch  East  In- 
dies— Natural  law  governing  the  selection  and  use  of  metallic  money — 
Experience  of  Corea — The  metal  coinage  system  of  the  world  tri- 
metallic — The  gold  standard  a  necessity  of  advanced  civilization — 
The  fall  of  prices  due  to  more  potent  agencies  than  variations  in  the 
volumes  or  relative  values  of  the  precious  metals  .  .  .  224 

VII. 

Governmental  interference  with  production  and  distribution  as  a  cause  of 
economic  disturbance— Economic  sequences  of  the  repeal  of  the  Brit- 


CONTENTS. 


XI 


PAGE 

ish  corn  laws — Extension  of  commercial  freedom — Resulting  pros- 
perity— Reactionary  policy  after  1876 — Causes  influencing  to  reaction 
— Commercial  policy  of  Russia — Illustrations  of  recent  restrictive 
commercial  legislation — France  and  Italy — French  colonial  policy — 
Revival  of  the  restrictive  commercial  ideas  of  the  middle  ages — Local 
and  trade  legislation  in  the  United  States — Restrictions  on  immigra- 
tion and  residence — Retrogression  in  the  comity  of  nations — Results 
of  tariff  conflicts  in  Europe — The  development  of  trusts — Indications 
of  the  abandonment  of  commercial  restrictions  in  Europe — Extraor- 
dinary experiences  of  the  beet-sugar  production — International  con- 
ference for  the  abolition  of  sugar  bounties — Experience  of  France  in 
respect  to  shipping  bounties — Relative  commercial  importance  of  dif- 
ferent European  nations — Per  capita  wealth  in  different  countries — 
Relative  production  and  prices  of  iron  and  steel  in  the  United  States 
and  Great  Britain — Augmentation  of  domestic  prices  by  taxes  on  im- 
ports— Economical  disturbances  contingent  on  war  expenditures  .  260 

VIII. 

The  economic  outlook — Tendency  to  pessimistic  views — Antagonism  of 
sentiment  to  correct  reasoning — The  future  of  industry  a  process  of 
evolution — The  disagreeable  elements  of  the  situation — All  transi- 
tions in  the  life  of  society  accompanied  by  disturbance — Incorrect 
views  of  Tolstoi — Beneficial  results  of  modern  economic  conditions 
— Existing  populations  not  formerly  possible — The  Malthusian  the- 
ory— Present  application  to  India — Illustrations  of  the  effect  of  new 
agricultural  methods  on  production — No  future  famines  in  civilized 
countries — Creation  of  new  industrial  pursuits — Doubtful  perpetua- 
tion of  the  Government  of  the  United  States  under  old  economic 
conditions — Increase  in  the  world's  supply  and  consumption  of  food 
— Increase  in  the  varieties  of  food — Low  cost  of  subsistence  under 
attainable  conditions  in  the  United  States — Savings-bank  statistics — 
Decrease  of  pauperism — Statistics  of  crime — Increase  in  the  duration 
of  human  life — Extermination  of  certain  diseases — Future  of  medi- 
cine and  surgery — Unfavorable  results  of  new  conditions  of  civiliza- 
tion— Increase  of  suicides — Divorce  statistics — Change  in  the  condi- 
tion of  the  British  people  since  1840 — Wealth  of  Great  Britain — British 
education  and  taxation — Present  higher  vantage-ground  of  humanity  824 

IX. 

The  discontent  of  labor— Causes  for— Displacement  of  labor— Results  of 
the  invention  of  stocking-making  machinery — Increased  opportunity 
for  employment  contingent  on  Arkwright's  invention — Destructive 
influences  of  material  progress  on  capital — Effect  of  the  employment 
of  labor-saving  machinery  on  wages — On  agricultural  employments — 
Extent  of  labor  displacement  by  machinery — The  cause  of  Irish  dis- 


xii  CONTENTS. 


content  not  altogether  local — Impoverishment  of  French  proprietors — 
IB  there  to  be  an  anarchy  of  production  ? — Effect  of  reduction  of  price 
on  consumption — On  opportunities  for  labor — Illustrative  examples — 
Influence  of  taxation  on  restraining  consumption — Experiences  of 
tolls  on  Brooklyn  Bridge — Characteristics  of  different  nationalities  in 
respect  to  the  consumption  of  commodities — Creation  of  new  industries 
— Effect  of  import  taxes  on  works  of  art — Tendency  of  over-production 
to  correct  itself— Present  and  prospective  consumption  of  iron — Work 
breeds  work — Pessimistic  views  not  pertinent  to  present  conditions  .  364 

X. 

Discontent  of  labor  in  consequence  of  changes  in  the  conditions  of  em- 
ployment— Subordination  to  method  and  routine  essential  to  all  sys- 
tematized occupations — Compensations  therefrom — Benefits  of  the 
capitalistic  system  of  production — Werner  Siemens's  anticipations — 
Discontent  of  labor  in  consequence  of  greater  intelligence — Best  defi- 
nition of  the  difference  between  a  man  and  an  animal — Increase  in 
personal  movement — Change  in  character  of  the  English,  French, 
and  German  people — What  is  socialism? — Meaning  of  progressive 
material  and  social  development — Advance  in  wages  in  Great  Britain, 
the  United  States,  and  France — Coincident  change  in  the  relative 
number  of  the  lowest  class  of  laborers — Relation  of  wages  to  the  cost 
of  living — Increase  in  expenditures  for  rent — Curious  demonstration 
of  the  improved  condition  of  the  masses — Reduction  of  the  hours  of 
labor — Why  wages  have  risen  and  the  price  of  commodities  fallen — 
Impairment  of  the  value  of  capital — Reduction  of  the  rates  of  interest 
— Decline  in  land  values  .......  396 

XL 

The  economic  outlook,  present  and  prospective — Necessity  of  studying 
the  situation  as  an  entirety — Compensation  for  economic  disturb- 
ances— Inequality  in  the  distribution  of  wealth  a  less  evil  than  equal- 
ity of  wealth — The  problem  of  poverty  as  affected  by  time — Tendency 
of  the  poor  toward  the  centers  of  population — Relation  of  machinery 
to  the  poverty  problem — Reduction  of  the  hours  of  labor  by  legis- 
lation— Fallacy  of  eight-hour  arguments — The  greatest  of  gains  from 
recent  material  progress — Increase  of  comfort  to  the  masses  from 
decline  of  prices — Oleomargarine  legislation — Difference  between 
wholesale  and  retail  prices — Relation  between  prices  and  poverty — 
Individual  differences  in  respect  to  the  value-perceiving  faculty — 
Characteristics  of  the  Jews — Relative  material  progress  of  different 
countries — Material  development  of  Australia  and  the  Argentine  Re- 
public— Great  economic  changes  in  India — Great  material  progress  in 
Great  Britain — The  economic  changes  of  the  future — Further  cheap- 
ening of  transportation — Future  of  agriculture — Position  of  the  last 
third  of  the  nineteenth  century  in  history  . •  >  .  .  427 


RECENT  ECONOMIC  CHANGES. 


I. 

Economic  disturbances  since  1873 — Character  and  universality  of  such  dis- 
turbances —Conditions  antecedent — Experience  of  Germany —Of  the  United 
States— Effect  of  crop  failures  in  Europe,  1879-' 81 — Disturbances  in  Great 
Britain,  France,  Belgium,  Russia,  and  Spain — Chronological  presentation 
of  industrial  experiences — Speculations  as  to  causes — Tendency  to  magnify 
local  influences — The  recognition  of  a  cause  universal  in  its  influence 
necessary  to  explain  a  universal  phenomenon. 

THE  existence  of  a  most  curious  and,  in  many  respects, 
unprecedented  disturbance  and  depression  of  trade,  com- 
merce, and  industry,  which,  first  manifesting  itself  in  a 
marked  degree  in  1873,  has  prevailed  with  fluctuations  of 
intensity  up  to  the  present  time  (1889),  is  an  economic  and 
social  phenomenon  that  has  been  everywhere  recognized. 
Its  most  noteworthy  peculiarity  has  been  its  universality; 
affecting  nations  that  have  been  involved  in  war  as  well  as 
those  which  have  maintained  peace;  those  which  have  a 
stable  currency,  based  on  gold,  and  those  which  have  an 
unstable  currency,  based  on  promises  which  have  not  been 
kept ;  those  which  live  under  a  system  of  free  exchange  of 
commodities,  and  those  whose  exchanges  are  more  or  less 
restricted.  It  has  been  grievous  in  old  communities  like 
England  and  Germany,  and  equally  so  in  Australia,  South 
Africa,  and  California,  which  represent  the  new;  it  has 
been  a  calamity  exceeding  heavy  to  be  borne,  alike  by  the 
inhabitants  of  sterile  Newfoundland  and  Labrador,  and  of 


2  RECENT  ECONOMIC  CHANGES. 

the  sunny,  fruitful  sugar-islands  of  the  East  and  West  In- 
dies ;  and  it  has  not  enriched  those  at  the  centers  of  the 
world's  exchanges,  whose  gains  are  ordinarily  the  greatest 
when  business  is  most  fluctuating  and  uncertain.* 

One  of  the  leading  economists  and  financiers  of  France, 
M.  Leroy  Beaulieu,  claims  that  the  suffering  has  been  great- 
est in  his  country,  humiliated  in  war,  shorn  of  her  territory, 
and  paying  the  maximum  of  taxation ;  but  not  a  few  stand 
ready  to  contest  that  claim  in  behalf  of  the  United  States, 
rejoicing  in  the  maintenance  of  her  national  strength  and 
dominion,  and  richer  than  ever  in  national  resources. 

Commenting  upon  the  phenomena  of  the  industrial  de- 
pression subsequent  to  the  early  months  of  1882,  the  Director 


*  The  poverty  in  Australia,  in  1885,  was  reported  to  be  more  extreme  than 
at  any  former  period  in  the  history  of  the  colonies ;  multitudes  at  Adelaide, 
South  Australia,  surrounding  the  Government  House  and  clamoring  for  food 
— the  causes  of  distress  assigned  being  failure  of  the  harvest,  drought,  and 
general  commercial  depression.  This  depression,  especially  of  the  agricultu- 
ral interests,  continued  in  a  marked  degree  through  the  year  1885,  the  ex- 
ports of  the  colonies  declining  thirteen  per  cent  and  the  imports  six  per  cent 
as  compared  with  those  of  the  preceding  year.  With  an  increase  of  three  per 
cent  in  population  for  the  year,  the  colonial  revenues  of  1886  also  showed  a 
marked  decline  as  compared  with  1885.  Since  1887,  however,  business  in 
Australia  has  greatly  improved. 

"  The  close  of  the  year  1884  brought  with  it  little,  if  any,  improvement, 
in  the  material  condition  of  South  Africa.  Commercial  disasters  may  not 
have  been  so  frequent  as  during  the  previous  year,  but  this  may  be  explained 
by  the  fact  that  trade  has  reached  so  low  a  level  that  very  little  room  existed 
for  further  failures.  No  new  enterprises  have  been  set  on  foot,  and  the  sus- 
pension of  many  of  the  public  works  has  tended  to  further  reduce  the  com- 
mercial prosperity  of  the  country.  Consumption  has  been  upon  the  lowest 
possible  scale,  retrenchment  universal,  and  want  of  employment,  and  even  of 
food,  among  the  laboring-classes,  a  grave  public  difficulty." — United  States 
Consul  SILEB,  Report  to  State  Department,  1885. 

January,  1885.  The  price  of  mackerel  in  1884  (Boston)  was  lower  than  at 
any  time  since  1849 ;  and,  in  the  case  of  codfish,  the  lowest  since  1838.  On 
the  other  hand,  the  price  of  mackerel  in  December,  1888,  in  the  same  market, 
was  so  high  as  to  almost  render  the  consumption  of  this  article  of  food  a  mat- 
ter of  luxury.  In  all  countries  dependent  in  a  great  degree  on  the  production 
of  cane-sugar,  the  depression  of  industry  in  recent  years  has  also  been  very 
great,  and  still  (1889)  continues. 


ECONOMIC  DISTURBANCES  SINCE  1873.  3 

of  the  United  States  National  Bureau  of  Labor,  in  his  re- 
port for  1886,  considers  the  nations  involved,  in  respect  to 
their  relations  to  each  other  and  to  severity  of  experience, 
to  stand  in  the  following  order :  Great  Britain,  the  United 
States,  Germany,  France,  Belgium.  The  investigations  of 
the  director  also  indicated  a  conclusion  (of  the  greatest  im- 
portance in  the  consideration  of  causes) ;  namely,  that  the 
maximum  of  economic  disturbance  has  been  experienced  in 
those  countries  in  which  the  employment  of  machinery,  the 
efficiency  of  labor,  the  cost  and  the  standard  of  living,  and 
the  extent  of  popular  education  are  the  greatest ;  and  the 
minimum  in  countries,  like  Austria,  Italy,  China,  Mexico, 
South  America,  etc.,  where  the  opposite  conditions  prevail. 
These  conclusions,  which  are  concurred  in  by  nearly  all 
other  investigators,  apply,  however,  more  especially  to  the 
years  prior  to  1883,  as  since  then  "  depression  "  has  mani- 
fested itself  with  marked  intensity  in  such  countries  as 
Eussia,  Japan,  Zanzibar,  Uruguay,  and  Eoumania. 

The  business  of  retail  distribution  generally — owing, 
probably,  to  the  extreme  cheapness  of  commodities — does 
not,  moreover,  appear  to  have  been  less  profitable  than  usual 
during  the  so-called  period  of  depression ;  in  contradistinc- 
tion to  the  business  of  production,  which  has  been  generally 
unprofitable. 

It  is  also  universally  admitted  that  the  years  immediately 
precedent  to  1873— i.  e.,  from  1869  to  1872— constituted  a 
period  of  most  extraordinary  and  almost  universal  inflation 
of  prices,  credits,  and  business;  which,  in  turn,  has  been 
attributed  to  a  variety  or  sequence  of  influences,  such  as 
excessive  speculation ;  excessive  and  injudicious  construction 
of  railroads  in  the  United  States,  Central  Europe,  and  Kus- 
sia  (1867-'73) ;  the  opening  of  the  Suez  Canal  (1869) ;  the 
Franco-German  War  (1870-'71) ;  and  the  payment  of  the 
enormous  war  indemnity  of  fifty-five  hundred  million  francs 
(eleven  hundred  million  dollars)  which  Germany  exacted 
from  France  (1871-'73).  The  contemporary  comments  of 


4  RECENT  ECONOMIC  CHANGES. 

two  English  journals,  of  recognized  authority,  on  the  course 
of  events  in  1872,  constitute  also  an  important  contribution 
to  our  information  on  this  subject.  Under  date  of  March, 
1873,  the  London  "  Economist,"  in  its  review  of  the  com- 
mercial history  of  the  preceding  year,  says : 

Of  all  events  of  the  year  (1872)  the  profound  economic  changes 
generated  by  the  rise  of  prices  and  wages  in  this  country,  in  Central 
and  Western  Europe,  and  in  the  United  States,  have  been  the  most 
full  of  moment. 

And  the  London  "  Engineer,"  under  date  of  February, 
1873,  thus  further  comments  on  the  situation : 

The  progress  of  events  during  1872  will  not  soon  be  forgotten  by 
engineers.  The  position  assumed  by  the  working-classes,  and  the  un- 
precedented demand  for  iron  and  machinery,  combined  to  raise  the 
cost  of  all  the  principal  materials  of  construction  to  a  point  absolutely 
without  parallel,  if  we  bear  in  mind  that  the  advance  of  prices  was 
not  localized,  but  universal,  and  that  the  duration  of  the  rise  was  not 
limited  to  a  few  months  or  weeks,  but,  having  extended  already  over 
a  period  of  some  months,  shows  little  sign  at  this  moment  of  any  sen- 
sible abatement.  In  1872  scarcely  a  single  step  in  advance  was  made 
in  the  science  or  practice  of  mechanical  engineering.  No  one  had  time 
to  invent,  or  improve,  or  try  new  things.  The  workingman  is  setting 
spurs  to  his  employers  with  no  gentle  touch,  and  already  we  find  that 
every  master  with  capital  at  stake  is  considering  how  best  he  can  dis- 
pense with  the  men  who  give  him  so  much  trouble.  Of  course,  the 
general  answer  always  assumes  the  same  shape — use  a  tool  whenever 
it  is  possible  instead  of  a  man. 

The  period  of  economic  disturbance  which  commenced 
in  1873  appears  to  have  first  manifested  itself  almost  simul- 
taneously in  Germany  and  the  United  States  in  the  latter 
half  of  that  year.  In  the  former  country  the  great  and 
successful  results  of  the  war  with  France  had  stimulated 
every  department  of  thought  and  action  among  its  people 
into  intense  activity.  The  war  indemnity,  which  had  been 
exacted  of  France,  had  been  used  in  part  to  pay  off  the 
debt  obligations  of  the  Government,  and  ready  capital  be- 
came so  abundant  that  banking  institutions  of  note  almost 


EXPERIENCE  OP  GERMANY  IN  1873-73.  5 

begged  for  the  opportunity  to  place  loans,  at  rates  as  low  as 
one  per  cent,  with  manufacturers,  for  the  purpose  of  en- 
larging their  establishments.  As  a  legitimate  result,  the 
whole  country  projected  and  engaged  in  all  manner  of  new 
industrial  and  financial  undertakings.  Thousands  of  new 
concerns  were  called  into  existence,  the  management  of 
which  did  not  give  the  slightest  attention  to  sound  com- 
mercial principles.  In  Prussia  alone  six  hundred  and 
eighty-seven  new  joint-stock  companies  were  founded  dur- 
ing the  year  1872  and  the  first  six  months  of  1873,  with  an 
aggregate  capital  of  $481,045,000.  The  sudden  growth  of 
industries,  and  the  temptations  of  cities  and  towns  (the  sud- 
den augmentation  of  which  is  so  striking  a  feature  in  the 
history  of  Germany  after  the  year  1870),  had  also  induced 
hundreds  of  thousands  of  men  and  women  to  desert  agri- 
cultural pursuits  and  to  seek  employment  in  trades.  Such 
a  state  of  things,  as  is  now  obvious,  was  most  unnatural,  and 
could  not  continue;  and  the  reaction  and  disaster  came 
with  great  suddenness,  as  has  been  already  stated,  in  the 
fall  of  1873,  but  without  anticipation  on  the  part  of  the 
multitude.  Great  fortunes  rapidly  melted  away,  industry 
became  paralyzed,  and  the  whole  of  Germany  passed  at  once 
from  a  condition  of  apparently  great  prosperity  to  a  depth 
of  financial,  industrial,  and  commercial  depression  that  had 
never  been  equaled. 

In  the  United  States  the  phenomena  antecedent  to  the 
crisis  were  enumerated  at  the  time  to  be,  "  a  rise  of  prices, 
great  prosperity,  large  profits,  high  wages,  and  strikes  for 
higher ;  large  importations,  a  railway  mania,  expanded  credit, 
over- trading,  over-building,  and  high  living."  The  crisis 
began  on  the  17th  of  September,  1873,  by,the  failure  of  a 
comparatively  unimportant  railway  company  —  the  New 
York  and  Oswego  Midland.  On  the  18th,  the  banking- 
house  of  Jay  Cooke  &  Co.  failed.  On  the  19th,  nineteen 
other  banking-houses  failed.  Then  followed  a  succession  of 
bankruptcies,  until  in  four  years  the  mercantile  failures 


6  EECENT  ECONOMIC  CHANGES. 

had  aggregated  $775,865,000 ;  and  on  January  1,  1876,  the 
amount  of  American  railway  bonds  in  default  amounted  to 
$789,367,655. 

The  period  of  economic  disturbance  which  thus  began 
in  Germany  and  the  United  States  soon  extended  to  France 
and  Belgium ;  and  thereafter,  but  with  varying  degrees  of 
severity,  to  Great  Britain  (i.  e.,  in  the  latter  months  of  the 
succeeding  year),  to  the  other  states  of  Europe,  and  ulti- 
mately to  the  commercial  portions  of  almost  every  country. 
The  testimony  before  the  British  Parliamentary  Commis- 
sion (1885-'86),  however,  shows  that  the  depression  in  Great 
Britain  was  not  at  once  universal ;  but  that,  on  the  contrary, 
production,  employment,  and  profits,  at  such  great  manu- 
facturing centers  as  Birmingham  and  Huddersfield,  were 
above  the  average  until  1875. 

By  many  writers  on  this  subject,  the  depression  and  dis- 
turbance of  industry,  which  commenced  in  1873,  are  re- 
garded as  having  terminated  in  1878-'79 ;  but  all  are  agreed 
that  they  recommenced,  with  somewhat  modified  conditions, 
and  even  with  increased  severity,  in  1882-'83.  A  full  con- 
sideration of  the  larger  evidence  which  is  now  (1889)  avail- 
able would,  however,  seem  to  lead  to  the  conclusion  that 
there  really  was  no  termination  of  the  abnormal  course  of 
events,  and  the  marked  definite  commencement  of  which 
is  assigned  to  1873,  but  that  what  has  been  regarded  as 
a  "termination"  was  only  an  "interruption,"  occasioned 
by  extraordinary  causes,  varying  locally,  and  by  no  means 
universal.  Thus,  a  failure  during  the  years  1879,  1880,  and 
1881,  of  the  cereal  crops  of  Europe  and  most  other  coun- 
tries of  the  world,  with  the  exception  of  the  United  States — 
a  failure  for  which,  in  respect  to  duration  and  extent,  there 
had  been  no  parallel  in  four  centuries — occasioned  a  remark- 
able demand  on  the  latter  country  for  all  the  food-products 
it  could  supply  at  extraordinary  prices — the  exportations  of 
wheat  rising  from  40,000,000  bushels  in  1877  to  122,000,000 
in  1879, 153,000,000  in  1880,  and  150,000,000  in  1881 ;  while 


EFFECT  OF  CROP  FAILURES  IN  EUROPE.  7 

the  corresponding  values  of  the  amount  exported  rose  from 
847,000,000  in  1877  to  $130,000,000  in  1879,  $190,000,000 
in  1880,  and  $167,000,000  in  1881.  There  was  also  a  corre- 
sponding increase  in  the  quantity  and  value  of  the  Ameri- 
can exports  of  other  cereals,  and  also  of  most  meat  products 
and  provisions.* 

Such  a  demand  at  extraordinary  prices  for  crops,  beyond 
the  average  in  quantity  and  quality,  brought  temporary 
prosperity  to  American  producers,  and  induced  great  in- 
dustrial and  commercial  activity  throughout  the  United 
States;  and  although  the  crops  of  other  countries  were 
notably  far  below  the  average,  yet  the  great  advance  in 
prices  undoubtedly  went  far  to  alleviate  the  distress  of  the 
foreign  agriculturist,  even  if  it  did  not  in  some  cases  actu- 
ally better  his  condition  and  increase  his  purchasing  power 
of  other  than  food-products.  The  extent  to  which  the 
American  producer  availed  himself  of  his  increased  purchas- 
ing power  during  the  years  under  consideration  is  indicated 
by  the  increase  which  occurred  in  the  importation  of  foreign 
merchandise  on  the  part  of  the  United  States,  namely,  from 
$437,051,000  in  1878  to  $667,954,000  in  1880,  and  $722,- 
639,000  in  1882.  Such  an  increase  represented  payment  in 
part  for  American  exports  ($110,575,000  in  gold  and  silver 
being  imported  in  addition  in  1881),  and  a  corresponding 
demand  for  the  products  of  foreign  industries — the  special 
effect  on  British  industry  being  characterized  by  a  statement 
from  one  of  the  witnesses  before  the  Eoyal  Commission  (a 
representative  of  one  of  the  districts  of  Liverpool)  that  "  the 
depression  continued  until  1880,  when  there  occurred  an 
American  boom,  which  temporarily  lifted  prices  and  induced 

*  No.  1  spring  wheat,  which  commanded  $1.05  per  bushel  in  the  New  York 
market  on  the  1st  January,  1878,  was  quoted  at  $1.60  at  a  corresponding  date 
in  1879  ;  and  at  $1.39  in  1881.  The  corresponding  advance  in  corn  was  from 
45  cents  per  bushel  in  1878  to  68  cents  in  1879,  and  70  cents  in  1881 ;  while 
the  advance  in  mess-pork  was  from  $7.05  per  barrel  in  1878  to  $12.621  in  1879, 
and  $17  in  1881. 


8  RECENT  ECONOMIC  CHANGES. 

activity."  The  testimony  of  other  witnesses  was,  however, 
to  the  effect  that  in  many  branches  of  British  industry  there 
was  no  improvement  of  condition  either  in  1878,  1880,  or 
in  any  subsequent  year ;  the  Commission  itself  reporting  (in 
December,  1886)  that  there  was  a  general  agreement  among 
those  whom  it  consulted  that  the  depression  under  consid- 
eration, "  so  far  as  Great  Britain  was  concerned,  dates  from 
about  the  year  1875,  and,  with  the  exception  of  a  short 
period  enjoyed  by  certain  branches  of  trade  in  the  years 
1880  to  1883,  it  has  proceeded  with  tolerable  uniformity, 
and  has  affected  the  trade  and  industry  of  the  country  gen- 
erally, especially  those  branches  connected  with  agriculture." 
The  Commission  further  reported  that  the  information  re- 
ceived by  them  leads  to  the  conclusion  that  "  in  Belgium, 
France,  Eussia,  Scandinavia,  Spain,  and  the  United  States," 
the  depression  has  been  "  almost  identical  in  its  leading  feat- 
ures with  that  existing  in  the  United  Kingdom." 

In  Germany  and  Belgium  the  reaction  experienced  in 
1879,  it  is  admitted,  did  not  extend  beyond  1882. 

In  France  the  condition  of  agricultural  and  other  labor- 
ers continued  so  deplorable  that  the  French  Chamber  of 
Deputies  appointed  a  special  commission  of  inquiry  in  1884 
with  a  view  to  devising  measures  for  relief ;  while  in  Great 
Britain  the  condition  of  trade  and  industry  has  uninter- 
ruptedly been  regarded  since  1882-'83  with  great  anxiety. 
There  is  a  very  general  agreement  of  opinion  in  England 
and  on  the  Continent  of  Europe  that  the  years  1879,  1885, 
and  1886  were  the  worst  that  have  been  experienced  in  the 
period  commencing  with  1873.  In  England,  France,  and 
Germany,  the  increase  or  decrease  in  exports  is  popularly 
regarded  as  an  indication  of  the  condition  of  business,  and, 
assuming  100  to  represent  the  exports  for  1883,  the  decline 
in  the  value  of  the  exports  of  these  several  countries  since 
that  year  may  be  represented  as  follows:  England,  1883, 
100 ;  1884,  92-2 ;  1885,  88-5,  a  falling  off  in  two  years  of 
11'5  per  cent.  The  record  of  France  is  better — 1883,  100 ; 


ILLUSTRATIONS  OF  BUSINESS  DEPRESSION,         9 

1884,  93-1;  1885,  92-3,  a  falling  off  of  7-7  per  cent;  while 
Germany  falls  behind  both  countries :  1882,  100 ;  1883,  98 ; 
1884,  89 ;  1885,  87-5,  a  falling  off  of  12-5  per  cent.  The 
transport  of  merchandise  on  all  the  French  railways,  calcu- 
lated in  tons  carried  one  kilometre,  fell  progressively  from 
11,064,000,000  in  1883  to  8,804,000,000  in  1886 ;  the  water- 
carriage  of  France  for  the  same  period,  calculated  in  the 
same  manner,  remaining  stationary. 

The  extreme  depression  of  business  in  the  United  States 
in  1884-'85  showed  itself  very  curiously  in  the  diminution 
of  the  receipts  of  the  postal  service  of  the  country.  In 
October,  1883,  the  rates  of  letter-postage  were  reduced  from 
three  to  two  cents  per  half-ounce.  The  aggregate  receipts 
fell  off — as  was  to  be  expected — but  the  deficiency  for  the 
second  year  under  the  reduced  rate  was  largely  in  excess  of 
what  was  experienced  the  first  year,  although  population 
had  increased  by  at  least  a  million  during  the  second  period. 

For  the  year  1887  there  was  a  general  concurrence  of 
opinion  that  the  world's  business  experienced  a  marked 
improvement. 

Eeviewing  the  condition  of  British  trade  and  industry, 
the  London  "  Economist,"  in  its  "  Commercial  History  and 
Keview  of  1887,"  says : 

That  we  did  a  distinctly  bigger  business  than  in  1886  there  can  be 
no  doubt.  Whether  it  was  a  more  profitable  business  is  another  ques- 
tion, and  one  which  it  is  more  difficult  to  answer.  In  certain  branches 
of  trade  manufacturers  did  undoubtedly  improve  their  position.  It  was 
so  in  the  finished  iron  trade,  in  ship-building,  in  the  spinning  branches 
of  the  cotton  trade,  in  the  jute  trade,  and  probably  in  the  woolen  trade 
as  a  whole.  And  in  other  branches,  if  there  is  no  improvement  to 
record,  there  was  certainly  little,  if  any,  retrogression.  It  appears 
somewhat  anomalous  that  a  year  which  has  witnessed  these  changes 
for  the  better  in  the  general  condition  of  (British)  trade  should  also 
have  been  characterized  by  louder  complaints  of  lack  of  employment 
for  and  of  distress  among  our  working  population. 

For  1887  the  foreign  trade  of  France,  calculated  on  the 
returns  for  1886,  showed  a  small  improvement. 


10  RECENT  ECONOMIC  CHANGES. 

On  the  other  hand,  the  condition  of  trade  and  industry 
in  Russia,  which  is  almost  exclusively  an  agricultural  and 
pastoral  country,  continues,  as  it  has  been  for  recent  years, 
to  be  one  of  extreme  depression.  In  the  production  of 
wheat  she  has  had  to  compete  with  two  great  competitors, 
the  United  States  and  India,  both  of  which  have  had  de- 
cided advantages  in  the  contest.  Both  the  United  States 
and  India,  too,  have  gained  more  by  the  great  reduction  in 
the  cost  of  ocean  carriage  than  has  Russia,  which,  moreover, 
has  suffered  from  many  special  difficulties ;  her  political 
and  economical  position  having  necessitated  a  considerable 
increase  in  taxation,  which  has  added  to  the  cost  of  produc- 
tion, while  some  of  her  best  and  most  accessible  customers 
have  shut  out  her  cereal  produce  as  far  as  possible  by  the 
imposition  of  high  customs  duties.* 

In  Spain  and  Portugal  the  economic  condition  of  affairs 
during  1887  and  1888  was  reported  as  most  deplorable. 
In  the  former  country  emigration  was  assuming  alarming 
proportions ;  and  with  a  depression  alike  of  agriculture  and 
manufactures,  the  disposition  to  gain  relief  by  the  exclusion 
of  all  foreign  competing  products,  or  by  further  restrictions 
on  foreign  trade,  was  becoming  almost  universal. 

During  the  year  1888,  owing  to  an  undoubted  expansion 
of  trade  and  a  marked  rise  in  the  prices  of  a  few  commodi- 
ties, "  which  bulk  largely  in  the  eyes  of  the  public,  there 
was  a  general  disposition  in  England  to  believe  that  there 
had  been  a  distinct  rise  in  the  general  level  of  prices."  Ac- 
cording, however,  to  the  London  "  Economist,"  an  examina- 
tion of  all  available  data  failed  to  confirm  any  such  conclu- 
sion ;  but,  on  the  contrary,  showed  that,  eliminating  from 
the  discussion  a  marked  advance  in  the  prices  of  the  two 

*  A  striking  illustration  of  the  condition  of  Eussian  cultivators  is  sup- 
plied by  the  fact  that  some  80,000  of  them  have  surrendered  their  land,  find- 
ing the  costs  incidental  to  ownership  surpass  the  profits  thereof,  while  the 
army  of  beggars  includes  in  its  ranks  landowners  numbered  by  tens  of  thou- 
sands.— Correspondence  London  "Economist,"  November,  1887. 


CHRONOLOGICAL  PRESENTATION.        H 

metals  lead  and  copper — which,  was  wholly  due  to  specula- 
tive influences — the  general  level  of  prices  for  1888  was  not 
materially  different  from  what  it  was  in  1887.  For  the 
United  States,  according  to  the  New  York  "  Commercial 
Bulletin,"  there  was  no  recovery  of  prices,  the  year  1888 
closing  with  prices  fully  six  per  cent  lower  than  at  its  com- 
mencement. 

One  point  of  interest  which  is  here  specially  worthy  of 
note  from  its  bearing  on  the  discussion  of  causes,  is  that  the 
recurrence  of  the  period  of  depression  in  1882,  after  the 
favorable  reaction  which  occurred  to  a  greater  or  less  extent 
in  1879,  was  quiet  and  gradual,  as  if  matters  were  naturally 
again  assuming  a  normal  condition,  and  was  not  preceded 
or  accompanied  by  any  marked  financial  or  commercial  dis- 
turbances. On  the  contrary,  the  money  markets  of  the 
world  remained  "easy,"  and  were  characterized,  as  they 
have  ever  since  been,  by  a  plethora  of  capital  seeking  invest- 
ment and  a  low  rate  of  interest ;  so  that  the  economic  dis- 
turbance since  1882  has  been  mainly  in  the  nature  of  a 
depression  of  industry,  with  a  renewed  and  remarkable  de- 
cline of  prices ;  with  absolutely  no  decline,  but  rather  an 
increase  in  the  volume  of  trade,  and  certainly  no  falling  off 
in  production,  as  compared  with  the  figures  of  1880  and 
1881,  which  years  in  the  United  States,  and  to  some  extent 
in  other  countries,  were  regarded  as  prosperous. 

The  following  presentation,  chronologically  arranged,  of 
brief  extracts  from  various  publications  since  1872-'73,  will 
further  assist  to  a  recollection  and  comprehension  of  the 
course  of  events  since  that  period,  and  also  exhibit  the 
opinions  which  have  been  expressed  at  different  times,  re- 
specting the  "  influence,"  "  causes,"  and  duration  of  the  so- 
called  "  depression  of  trade  and  industry,"  by  those  who,  by 
position  or  investigation,  have  assumed  to  speak  with  more 
or  less  of  authority  on  the  subject.  And,  with  this  intent, 
attention  is  first  asked  to  the  following  retrospect  of  the 
curious  experience  of  the  iron  and  steel  industry  of  tho 


12  RECENT  ECONOMIC  CHANGES. 

United  States,  as  exhibited  by  quotations  from  the  reports 
of  the  American  Iron  and  Steel  Association  from  1873  to 

1887: 

1873.  The  year  1872  opened  with  an  increased  demand  for  iron  in 
nearly  all  civilized  countries.    Prices  advanced  rapidly  in  all  markets. 
The  supply  was  unequal  to  the  demand,  although  production  was 
everywhere  stimulated. — Report  of  the  American  Iron  and  Steel  Asso- 
ciation, November,  1873. 

1874.  The  reaction  (in  the  world's  demand  for  iron)  in  1874  has 
been  as  general  and  decided  as  the  advance  in  1872  was  unexpected 
and  bewildering.    It  has  been  felt  most  severely  in  the  United  States ; 
but  in  the  United  Kingdom,  and  in  France  and  Germany,  the  iron 
industry  has  been  so  much  depressed,  all  through  the  year,  that  many 
iron-works  have  been  closed,  and  many  others  have  been  employed 
but  a  part  of  the  time.    The  testimony  of  statistics,  and  of  all  calm 
observers,  shows  that  prostration  is  greater  at  the  close  of  1874  than 
it  was  at  the  close  of  1873,  and  that  the  general  distress  is  greater. 
At  least  a  million  of  skilled  and  unskilled  workingmen  and  working- 
women  in  this  country  are  out  of  employment  to-day,  because  there  is 
no  work  for  them  to  do. — Report,  December  31,  1874. 

1877.  Since  1873  each  year  has  shown  a  decrease  in  the  production 
of  pig-iron  in  the  United  States,  as  compared  with  the  preceding  year, 
the  percentage  of  decrease  being  as  follows :  1874,  six  per  cent ;  1875, 
fifteen  per  cent ;  1876,  eight  per  cent    This  is  a  very  great  shrinkage, 
and  indicates,  with  concurrent  low  prices,  a  very  great  depression  in 
the  pig-iron  industry  of  the  country.    If  the  rate  of  decrease  which 
marked  the  period  from  1873  to  1876  were  to  be  continued,  the  pro- 
duction of  pig-iron  in  the  United  States  would  entirely  cease  in  1884, 
less  than  eight  years  from  the  present  time,  and  our  furnace-stacks 
would  only  be  useful  as  observatories  for  the  study  of  astronomy. — 
Report,  June,  1887. 

1878.  More  than  one  half  of  the  furnaces,  and  many  of  the  rolling- 
mills,  were  idle  the  whole  year.    Prices  were  so  low  as  to  warrant  the 
impression  that  they  could  be  no  lower. — Report,  July,  1878. 

1879.  In  nearly  all  the  branches  of  the  domestic  iron  and  steel  in- 
dustries there  has  been  an  increased  production  in  1878  over  1877 ;  but 
this  increase  in  production  has  been  accompanied  by  a  decrease  in 
prices.    At  no  time  in  the  history  of  the  country  have  prices  for  iron 
and  steel  been  as  low  as  they  were  in  1878,  excepting  in  colonial  days, 
when  the  price  of  pig-iron  was  lower. — Report,  May  6,  1879. 

1880.  Near  the  close  of  1878  it  became  evident  that  the  business 


EXPERIENCE  OF  THE  IRON  INDUSTRY.  13 

depression  which  had  succeeded  the  panic  of  1873  was  slowly  disap- 
pearing, and  that  a  general  revival  of  prosperity  was  at  hand.  In  the 
closing  months  of  1879  excitement  and  speculation  took  the  place  of 
the  gloom  and  discouragement  with  which  the  American  iron-trade 
had  been  so  familiar  scarce  one  year  before,  and  the  business  of  buying 
and  selling  iron  became  close  neighbor  to  that  of  gambling  in  stocks. 
—Report,  May,  1880. 

No.  1  pig-iron,  which  sold  for  $53  per  ton  at  Philadel- 
phia in  September,  1872,  sold  for  $24  in  1874,  $21.25  in 
1876,  $16.50  in  1878,  $41  in  February,  1880,  and  $25  in 
May,  1880. 

1882.  The  year  1881  was  the  most  prosperous  year  American  iron 
and  steel  manufacturers  have  ever  known. — Report,  June,  1882. 

1883.  The  extraordinary  activity  in  our  iron  and  steel  industries, 
which  commenced  in  1879,  culminated  early  in  1882.    The  reaction 
was  not  sudden,  but  was  so  gradual  and  tranquil  that  for  some  time  it 
excited  no  apprehension.    In  November  and  December  the  market  was 
greatly  depressed.    At  the  beginning  of  December,  1881,  the  average 
price  of  steel  rails  at  the  (American)  mills  was  $60  per  ton,  but  in 
December,  1882,  the  average  price  was  only  $39.*    In  all  the  fluctu- 
ations of  iron  and  steel  that  have  taken  place  in  this  country,  we  know 
of  none  so  sweeping  as  this  decline  in  the  price  of  steel  rails,  if  we  ex- 
cept in  1879  and  1880,  and  many  of  these  were  entirely  speculative. — 
Report,  May,  1888. 

The  cause  of  this  serious  reaction  was  attributed,  in  the 
same  report,  in  great  measure  to  the  circumstance  that  "  we 
had  increased  our  capacity  for  the  production  of  most  forms 
of  iron  and  steel  much  faster  than  the  consumptive  wants 
of  the  country  had  increased." 

1884.  Since  the  publication  of  the  last  annual  report,  in  May,  1883, 
the  unsatisfactory  condition  of  the  American  iron-trade,  as  it  then 
existed,  has  not  improved.     It  has  steadily  grown  worse. — Report, 
May,  1884. 

1887.  The  year  1886  was  one  of  the  most  active  years  the  American 

*  The  average  price  of  Bessemer  steel  rails,  which  commanded  $39  per  ton 
at  American  mills  in  December,  1882,  declined  to  $28.50  in  1885.    For  1880  it 
was  $34.50 ;  for  January,  1887,  $31.50. 
2 


14:  RECENT  ECONOMIC  CHANGES. 

iron-trade  has  ever  experienced.  The  improvement  in  demand  which 
had  commenced  in  the  latter  part  of  1885  was  well  maintained  through- 
out the  whole  of  1886.  The  production  of  the  year  in  all  the  leading 
branches  of  the  trade  was  much  the  largest  in  our  history.  The  remote 
causes  of  the  revival  in  the  prosperity  of  the  American  iron-trade 
which  began  in  the  last  half  of  1885,  and  still  continues,  may  be  diffi- 
cult to  discover ;  but  one  influential  immediate  cause  is  directly  trace- 
able to  the  meeting  of  the  Bessemer  steel-rail  manufacturers  in  August, 
1885,  at  which  meeting  a  restriction  of  production  for  one  year  to 
avoid  the  evils  of  over-production  and  ruinous  prices  was  agreed  upon. 
This  action  was  almost  immediately  followed  by  beneficial  results  to 
the  iron-trade  of  the  whole  country,  and  to  many  other  branches  of 
domestic  industry.  An  incident  of  our  industrial  history  for  1886  was 
the  large  number  of  strikes  among  workingmen.  More  American 
workingmen  were  voluntarily  out  of  employment  in  that  year  than  in 
any  previous  year. — Report  for  April,  1887. 

The  year  1887  was  the  most  active  year  in  the  history  of  the  Ameri- 
can iron-trade,  far  exceeding  all  previous  years,  including  the  remark- 
able year  1886,  in  the  production  and  consumption  of  iron  and  steel  in 
all  their  leading  forms.  In  two  years,  from  1885  to  1887,  we  increased 
our  production  of  pig-iron  fifty-eight  per  cent ;  our  production  of  Bes- 
semer steel  ingots,  ninety-three  per  cent ;  our  production  of  Bessemer 
steel  rails,  one  hundred  and  nineteen  per  cent ;  and  our  production  of 
open-hearth  steel  ingots,  one  hundred  and  forty-one  per  cent.  These 
figures  tell  a  story  of  truly  wonderful  progress,  such  as  has  been  wit- 
nessed in  no  other  great  industry  in  this  country,  and  in  no  other  iron- 
making  country. — Report  for  May,  1888. 

The  report  for  January,  1889,  may  be  regarded  as  in  the 
nature  of  a  natural  sequence  from  the  antecedent  conditions 
above  reported. 

There  was  a  decline  in  the  aggregate  production  of  iron  and  steel 
in  1888  as  compared  with  1887,  and  there  was  a  shrinkage  in  prices ; 
so  that  the  year  was  not  a  prosperous  one  for  our  iron  and  steel  manu- 
factures, although  production  was  still  very  large.  We  did  not  con- 
sume as  much  pig-iron  as  in  1887.  The  shrinkage  in  consumption  of 
Bessemer  steel  rails  in  1888,  as  compared  with  1887,  was  790,180  gross 
tons ;  the  greatest  that  has  occurred  since  the  collection  of  the  sta- 
tistics of  these  industries  was  undertaken.  No.  1  anthracite  pig-iron 
at  Philadelphia  declined  within  the  year  from  $21  to  $  18  per  ton ; 
steel  rails  from  $31.50  to  $27.50. 


EVIDENCES  OF  BUSINESS  DEPRESSION.  15 

The  following  extracts  from  published  statements  and 
opinions  are  more  general  in  their  nature,  but  not  less  in- 
structive : 

1876.  Our  country  is  now  passing  through  a  period  of  unusual 
depression,  both  in  its  industries  and  its  business.  The  present  de- 
pressed condition  of  business  and  of  financial  affairs  exists  over  all 
countries  having  a  high  civilization.  —  Facts  and  Observations  ad- 
dressed to  the  Committee  on  Finance  of  the  Mutual  Life- Insurance 
Company  of  New  York,  July,  1876.  Printed  for  the  Private  Conven- 
ience of  the  Trustees. 

1876.  The  inquiry  has  been  sufficiently  broad  to  enable  them  (the 
committee)  to  point  out  with  a  considerable  degree  of  accuracy  the 
causes  which  have  immediately  operated  to  produce  the  present  de- 
pression in  the  commerce  of  the  country,  and  in  some  branches  of  its 
manufacturing  and  mining  industries.    These  causes  are  quite  beyond 
legislative  control  in  this  country. — Report  of  Select  Committee  of  the 
House  of  Commons,  Dominion  of  Canada,  1876. 

1877.  Hard  times !    For  four  years  this  sober  pass-word  has  gained 
in  gravity  of  import.    For  a  time  it  was  panic ;  but  suppositions  of 
speedy  recovery  have  given  place  to  a  conviction  of  underlying  facts 
that  these  hard  times  are  more  than  a  panic ;  that  the  existing  de- 
pressions of  trade  and  dearth  of  employment  are  not,  in  popular  appre- 
hension, exaggerated,  but  are  the  serious  results  of  causes  more  perma- 
nent in  their  nature  than  is  generally  considered. — Hard  Times,  by 
Franklin  W.  Smith,  Boston,  1877,  James  R.  Osgood  &  Co. 

CONGRESS  OF  THE  UNITED  STATES, 

HOUSE  OP  REPRESENTATIVES,  June  17, 1878. 

1878.  Mr.  Thompson  submitted  the  following  resolution,  which 
was  agreed  to : 

Whereas,  labor  and  the  productive  interests  of  the  country  are 
greatly  depressed,  and  suffering  severely  from  causes  not  yet  fully 
understood,  etc. :  Therefore, 

Resolved,  That  a  committee  of  seven  members  of  this  House  be 
appointed,  whose  duty  it  shall  be  to  inquire  into  and  ascertain  the 
causes  of  general  business  depression,  etc.,  and  report  at  the  next  ses- 
sion. 

1878.  Commercial  depression  is  the  universal  cry — a  commercial 
depression  probably  unprecedented  in  duration  in  the  annals  of  trade, 
except  under  the  disturbing  action  of  prolonged  war.  .  .  .  Ample  evi- 
dence abounds  on  all  sides  to  show  its  extent  and  severity  in  England. 


16  RECENT  ECONOMIC  CHANGES. 

Have  other  countries  bowed  their  heads  in  suffering  under  the  com- 
mercial depression  f  Let  America  be  the  first  to  speak.  In  1873  she 
experienced  a  shock  of  the  most  formidable  kind.  She  has  not  recov- 
ered from  the  shock  at  this  very  hour.  Let  us  visit  Germany — Ger- 
many the  conqueror  in  a  great  war,  and  the  exactor  of  an  unheard-of 
indemnity.  What  do  we  find  in  that  country!  Worse  commercial 
weather  at  this  hour  than  in  any  other.  Nowhere  are  louder  com- 
plaints uttered  of  the  stagnation  of  trade.  Austria  and  Hungary  re- 
peat the  cry,  but  in  a  somewhat  lower  voice.  And  so  we  come  round 
to  France,  the  people  whose  well-being  has  been  so  visited  with  the 
most  violent  assaults.  Her  losses  and  sufferings  have  surpassed  thoso 
endured  by  any  other  nation.  Yet  the  deep,  heavy  pressure  of  her 
commercial  paralysis  has  weighed  upon  her  the  least  oppressive  of  all. 
Such  a  depression,  spread  over  so  many  countries,  inflicting  such  con- 
tinuous distress,  and  lasting  for  so  long  a  period  of  time,  the  history 
of  trade  has  probably  never  before  exhibited. — BONAMY  PRICE,  Con- 
temporary Review,  1878. 

1879.  The  prevailing  depression  in  business  from  which  this  coun- 
try has  suffered  for  six  years,  and  from  which  nearly  every  country  in 
Europe  is  suffering  still,  has  probably  furnished  support  to  a  greater 
number  of  conflicting  economical  theories  than  any  other  occurrence 
of  ancient  or  modern  times.  .  .  .  The  result,  we  need  hardly  say,  has 
not  been  to  raise  the  reputation  of  political  economy  as  a  science.  In 
fact,  it  has  never  seemed  so  little  of  a  science  as  during  the  past  five 
years,  owing  to  the  extraordinary  array  of  proof  and  illustration  which 
the  holders  of  the  most  widely  divergent  views  have  been  able  to  pro- 
duce.— The  Nation  (New  York),  May,  1S79. 

1879.  We  have  just  passed  through  a  period  of  depression,  of  which, 
though  it  came  in  perfect  agreement  with  all  past  experiences,  was 
complicated  by  such  an  exceptional  conglomeration  of  untoward  cir- 
cumstances, and  protracted  to  such  a  weary  length,  that  men  seemed 
to  lose  faith  in  the  revival  which  was  almost  certain  to  come  sooner 
or  later,  and  began  to  ask  whether  the  commercial  supremacy  of  this 
country  was  not  permanently  undermined.  And  now,  with  the  new 
decade,  the  revival  is  really  here. — The  Recent  Depression  of  Trade, 
being  the  Oxford  Cobden  Prize  Essay  for  1879,  by  Walter  E.  Smith, 
London,  Trubner  &  Co.,  1880. 

1881.  The  industrial  depression  is  generally  thought  to  have  com- 
menced in  the  closing  months  of  1874,  and  it  increased  in  intensity 
throughout  1876  and  1877.— Prof.  HENRY  FAWCETT,  "  Free  Trade  and 
Protection"  London,  1881. 

1885.  The  present  depression  of  trade  is  remarkable,  not  so  much 


EXTENT  AND  INTENSITY  OF  DEPRESSION.         17 

for  its  intensity  or  for  its  extent — in  both  of  which  respects  it  has  been 
equaled  or  surpassed  on  previous  occasions — but  for  its  persistence 
during  the  long  period  of  eleven  years.  The  industrial  depression  is 
generally  thought  to  have  commenced  in  the  closing  months  of  1874 ; 
and,  during  every  succeeding  year,  it  has  continued  to  be  felt  with 
more  or  less  severity,  and  its  remarkable  persistence  has  been  com- 
mented on  by  politicians  and  public  writers.  Usually  a  period  of  de- 
pression is  quickly  followed  by  one  of  comparative  prosperity.  Such 
a  reaction  has  been  again  and  again  predicted  in  this  case,  but,  up  to 
the  present  time,  there  are  no  satisfactory  indications  that  the  evil 
days  are  passing  away.  It  is  evident,  therefore,  that  we  are  suffering 
in  an  altogether  exceptional  manner;  that  the  disease  of  the  social 
organism  is  due  to  causes  which  have  not  been  in  action  on  former 
occasions,  and  that  the  remedial  agencies  which  have  been  effective 
on  former  occasions  have  now  failed  us. — Bad  Times,  an  Essay  on  the 
Present  Depression  of  Trade,  by  Alfred  Russel  Wallace,  London,  Oc- 
tober, 1885. 

The  following  are  notable  extracts  from  the  testimony 
presented  to  the  Eoyal  (British)  Commission,  appointed 
August,  1885,  to  inquire  into  the  depression  of  trade  and 
industry,  and  embodied  in  their  reports  submitted  to  Parlia- 
ment in  1885-'86 : 

1885.  At  the  present  time  a  general  depression  of  trade  and  indus- 
try is  stated  to  exist  throughout  Italy.  While,  however,  depression  is 
general,  it  does  not  act  uniformly  on  all  industries. — Testimony  of 
Ellis  Colnaghi,  Her  Majesty's  Consul-General  at  Florence,  October  8, 
1885. 

The  depression  began  full  ten  years  ago,  and  still  continues. — Tes- 
timony of  the  Linen  Merchants'  Association  of  Belfast,  Ireland,  No- 
vember, 1885. 

The  origin  of  the  depression  from  which  we  suffer,  and  which 
is  at  the  lowest  point  yet  reached,  seems  to  be  a  reaction  from  the 
coal-famine  period  of  1872-'74,  and  which  was  perhaps  due  to  the 
inflation  consequent  on  the  Franco-German  War  in  1870.  The  prog- 
ress of  depression  has  been  irregular,  but  with  a  persistent  downward 
tendency  since  1874.  The  present  tendency  is  still  downward. — Testi- 
mony of  the  North  of  England  Iron  Manufacturers'  Association,  Sep- 
tember, 1885. 

The  depression  has  been  increasing  in  intensity  during  the  last 
four  years.  It  was  probably  never  greater  than  at  present  at  this 


18  RECENT  ECONOMIC  CHANGES. 

season  of  the  year. — Testimony  of  the  British  Paper-Makers'  Associa- 
tion, September,  1885. 

Trade  began  to  be  depressed  in  1876,  and  has  continued  so  until 
the  year  1883,  with  intermittent  spurts  of  improvement.  But  from 
the  end  of  1883  the  depression  has  become  increasingly  acute. —  Testi- 
mony of  North  Staffordshire  Chamber  of  Commerce,  October  21, 1885. 

As  a  proof  of  the  deplorable  state  this  trade  [woolen-yarn  spinning, 
Huddersfield,  England]  has  been  in  for  the  last  ten  or  fifteen  years, 
we  most  respectfully  beg  to  inform  you,  we  hold  the  list  of  fifty  firms 
of  spinners  who  have  been  ruined  and  brought  into  bankruptcy  court 
during  that  period.  Another  proof  of  the  very  serious  state  of  trade 
here  is  to  be  found  in  the  depreciated  value  of  carding  and  spinning 
machinery.  Good  machines,  and  for  all  practical  purposes  equal  to 
new,  if  brought  into  the  market  will  only  realize  some  thirty  or  forty 
per  cent  of  their  cost  price.  Mill  property  is  also  in  a  similar  posi- 
tion.— Report  of  the  Huddersfield  (England)  Chamber  of  Commerce, 
October,  1885. 

1886.  Out  of  the  total  number  of  establishments,  such  as  factories, 
mines,  etc.,  existing  in  the  country  [the  United  States],  about  eight 
per  cent  were  absolutely  idle  during  the  year  ending  July  1,  1885,  and 
perhaps  five  per  cent  more  were  idle  a  part  of  such  time ;  or,  for  a  just 
estimate,  seven  and  a  half  per  cent  of  the  whole  number  of  such  estab- 
lishments were  idle,  or  equivalent  to  idle,  during  the  year  named.  .  .  . 
Making  allowance  for  the  persons  engaged  in  other  occupations,  998,- 
839  constituted  "  the  best  estimate  "  of  the  possibly  unemployed  in  the 
United  States  during  the  year  ending  July  1,  1885  (many  of  the  unem- 
ployed, those  who  under  prosperous  times  would  be  fully  employed, 
and  who  during  the  time  mentioned  were  seeking  employment),  that  it 
has  been  possible  for  the  Bureau  to  make.  ...  A  million  people  out 
of  employment,  crippling  all  dependent  upon  them,  means  a  loss  to 
the  consumptive  power  of  the  country  of  at  least  $1,000,000  per  day, 
or  a  crippling  of  the  trade  of  the  country  of  over  $300,000,000  per 
annum. — Report  on  Industrial  Depression,  United  States  Bureau  of 
Labor,  1886. 

1886.  The  present  crisis  has  a  much  more  general  character  than 
any  of  the  crises  which  have  preceded  it ;  because  it  is  a  part  of  an 
abrupt  transformation  in  the  production  and  circulation  of  the  whole 
world.  For  the  same  reason,  it  is  destined  to  last  longer. — M.  LEEOY 
BEAULIEU,  Revue  des  Deux  Mondes,  1886. 

Summarizing  very  briefly  the  answers  which  we  received  to  our 
questions  and  the  oral  evidence  given  before  us,  there  would  appear  to 
be  a  general  agreement  among  those  we  consulted : 


SPECULATION  AS  TO  CAUSES.  19 

a.  That  the  trade  and  industry  of  the  country  are  in  a  condition 
which  may  be  fairly  described  as  depressed. 

b.  That  by  this  depression  is  meant  a  diminution,  and,  in  some 
cases,  an  absence  of  profit,  with  a  corresponding  diminution  of  employ- 
ment for  the  laboring-classes. 

c.  That  neither  the  volume  of  trade  nor  the  amount  of  capital 
invested  therein  has  materially  fallen  off,  though  the  latter  has  in 
many  cases  depreciated  in  value. 

d.  That  the  depression  above  referred  to  dates  from  about  the  year 
1875,  with  the  exception  of  a  short  period  of  prosperity  enjoyed  by 
certain  branches  of  trade  in  the  years  1880  to  1883. — Report  of  British 
Commission,  December,  1886. 

There  is  one  condition  revealed — i.  e.,  by  the  statistics  of  1885-'86 — 
that  is  very  noticeable ;  which  is,  that  prices  in  general  touched  the 
lowest  point  in  a  quarter  of  a  century.  There  were  those  who  sup- 
posed that  the  shrinking  processes  had  been  arrested  in  the  preceding 
year,  and  yet  the  figures  for  1885-'86,  in  nearly  all  departments  of 
business,  show  lower  prices  than  the  previous  year. — Report  of  the 
Chamber  of  Commerce,  Cincinnati,  1886. 

It  is  of  interest  to  note  how  few,  relatively,  of  the  staples,  raw  ma- 
terials or  finished  products,  have  left  the  year  1886  with  any  special 
gain  in  price  as  compared  with  one  year  or  with  two  years  ago,  and  it 
is  even  more  striking  to  enumerate  the  list  of  those  which  show  actu- 
ally no  gain  at  all,  or  a  loss  in  price. — Bradstreefs  -Journal,  January, 
1887. 

Wheat,  oats,  sugar,  butter,  tobacco,  and  petroleum  were  lower  in 
price  at  the  close  of  1886  than  at  the  close  of  1885.  Corn,  oats,  pork, 
lard,  and  cotton  were  lower  at  the  close  of  1876  than  at  the  beginning 
of  1885.— Ibid. 

For  conditions  of  trade  for  the  year  1887  and  1888,  see 
Chapter  IV. 

It  is  almost  unnecessary  to  say  that  a  subject  of  such 
transcendent  importance,  and  affecting  so  intimately  the 
material  interests  alike  of  nations  and  individuals,  has  nat- 
urally attracted  a  great  and  continually  increasing  attention 
throughout  the  whole  civilized  world,  entailing  at  least  one 
notable  result,  namely,  that  of  a  large  and  varied  contribu- 
tion to  existing  economic  literature.  Thus,  state  commis- 
sions for  inquiring  into  the  phenomena  under  consideration 
have  been  instituted  by  Great  Britain,  the  United  States, 


20  RECENT  ECONOMIC  CHANGES. 

France,  Italy,  and  the  Dominion  of  Canada,  all  of  which 
have  taken  evidence  and  reported  more  or  less  voluminously ; 
the  report  of  the  Eoyal  British  Commission  (1885-'86), 
comprising  five  folio  volumes  of  an  aggregate  of  about  1,800 
pages ;  while  the  books,  pamphlets,  magazine  articles,  and 
reviews  on  the  same  subject,  including  investigations  and 
discussions  on  collateral  matters  regarded  as  elements  or 
results  of  the  economic  problem  (such  as  the  wide-spread 
ferment  and  discontent  of  labor,  and  the  changes  in  the 
monetary  functions  of  gold  and  silver),  which  have  ema- 
nated from  individuals  or  commissions,  have  been  suffi- 
ciently numerous  to  constitute,  if  collected,  a  not  inconsid- 
erable library. 

In  all  these  investigations  and  discussions,  the  chief  ob- 
jective has  been  the  recognition  or  determination  of  causes ; 
and  most  naturally  and  legitimately,  inasmuch  as  it  is  clear 
that  only  through  such  recognitions  and  determinations  can 
the  atmosphere  of  mystery  which  to  a  certain  extent  envel- 
ops the  phenomena  under  consideration  be  dispelled,  and 
the  way  prepared  for  an  intelligent  discussion  of  remedies. 
And  on  this  point  the  opinions  or  conclusions  expressed 
have  been  widely  and  most  curiously  different.  Nearly  all 
investigators  are  agreed  that  the  wide-spread  and  long-con- 
tinued "  depression  of  business  "  is  referable  not  to  one  but 
a  variety  of  causes,  which  have  been  more  or  less  influential ; 
and  among  such  causes  the  following  are  generally  regarded 
as  having  been  especially  potential :  "  Over-production  "  ; 
"  the  scarcity  and  appreciation  of  gold,"  or  "  the  deprecia- 
tion of  silver,  through  its  demonetization  " ;  "  restrictions  of 
the  free  course  of  commerce  "  through  protective  tariffs  on 
the  one  hand,  and  excessive  and  unnatural  competition 
occasioned  by  excessive  foreign  imports  contingent  on  the 
absence  of  "  fair  "  trade  or  protection  on  the  other ;  heavy 
national  losses,  occasioned  by  destructive  wars,  especially 
the  Franco- Prussian  War;  the  continuation  of  excessive 
war  expenditures ;  the  failure  of  crops ;  the  unproductive- 


CURIOUS  DIVERSITY  OF  OPINIONS.  21 

ness  of  foreign  loans  or  investments  ;  excessive  speculation 
and  reaction  from  great  inflations ;  strikes  and  interruption 
of  production  consequent  on  trades-unions  and  other  organi- 
zations of  labor ;  the  concentration  of  capital  in  few  hands, 
and  a  consequent  antagonizing  influence  to  the  equitable 
diffusion  of  wealth;  "excessive  expenditures  for  alcoholic 
beverages,  and  a  general  improvidence  of  the  working-class- 
es." A  Dutch  committee,  in  1886,  found  an  important 
cause  in  "  the  low  price  of  German  vinegar."  In  Germany, 
in  1886-'88,  the  continuance  of  trade  depression  has  been 
assigned  in  a  great  measure  to  the  "  inflammable  condition 
of  international  affairs,"  and  to  "  looming  war  "  ;  although 
the  great  decline  in  the  price  of  beet-root  sugar,  and  the 
"  immigration  of  Polish  Jews,"  are  also  cited  as  having  been 
influential. 

In  the  investigations  undertaken  by  committees  of  Con- 
gress in  the  United  States,  the  causes  assigned  by  the  various 
witnesses  who  testified  before  them  were  comprised  under 
no  less  than  one  hundred  and  eighty  heads ;  and  an  almost 
equal  diversity  of  opinion  was  manifested  by  the  witnesses 
who  appeared  before  the  Eoyal  (British)  Commission.* 
The  special  causes  to  which  a  majority  of  the  Commission 
itself  attached  any  great  degree  of  importance,  stated  in  the 
order  presented  by  them,  are  as  follows  :  1.  Changes  in  the 
distribution  of  wealth — i.  e.,  in  Great  Britain ;  2.  Natural 
tendency  to  diminution  in  the  rate  of  profit  consequent  on 
the  progressive  accumulation  of  capital ;  3.  Over-produc- 
tion ;  4.  Impairment  of  agricultural  industry  consequent  on 
bad  seasons,  and  the  competition  of  the  products  of  other 

*  The  Birmingham  Chamber  of  Commerce  attributed  it  in  great  part  to 
German  and  Belgian  competition,  to  foreign  import  duties  on  home-manu- 
factured goods  exported  abroad,  and  exorbitant  railway  rates ;  the  Hartlepool 
Chamber  to  foreign  competition ;  Manchester,  the  same ;  Leeds,  "  to  foreign 
tariffs  "  ;  Liverpool,  to  a  loss  in  a  once  large  re-export  trade  in  cotton ;  Wol- 
verhampton,  to  changes  in  the  hours  of  labor  resulting  from  the  operation  of 
the  Factory,  Workshop,  and  Education  Acts,  and  the  action  of  the  various 
trades-unions. 


22  RECENT  ECONOMIC  CHANGES. 

soils  which  can  be  cultivated  under  more  favorable  condi- 
tions; 5.  Foreign  tariffs  and  bounties  and  the  restrictive 
commercial  policies  of  foreign  countries ;  6.  The  working  of 
the  British  Limited  Liability  Act.  In  addition  to  these 
special  causes,  others  of  a  general  character  were  mentioned ; 
such  as  "the  more  limited  possibilities  of  new  sources  of 
demand  throughout  the  world,  and  the  larger  amount  of 
capital  seeking  employment " ;  "  the  serious  fall  in  prices  " ; 
"  the  appreciation  of  the  standard  of  value  "  so  far  as  con- 
nected with  the  fall  of  prices  and  foreign  competition.  A 
respectable  minority  of  the  commission  also  included,  in  the 
list  of  principal  causes,  the  effect  of  British  legislation,  regu- 
lating the  hours  and  conditions  of  labor  on  the  cost  of  pro- 
duction as  compared  with  other  countries ;  and  the  discrimi- 
nations given  by  British  railways  to  foreign  producers  in  the 
conveyance  of  goods. 

It  would  seem  as  if  one  could  not  acquaint  himself  to 
any  considerable  extent  with  the  great  body  of  literature  on 
this  subject  of  the  recent  depression  of  trade,  without  be- 
coming impressed  with  the  tendency  of  many  writers  and 
investigators  of  repute,  and  of  most  of  the  persons  who 
have  given  testimony  before  the  commissions  of  different 
countries,  to  greatly  magnify  the  influence  of  purely  local 
causes.  "  The  real  and  deep-seated  cause  of  all  our  dis- 
tress," says  the  "  Oxford  Prize  Essay  "  for  1879,  "  is  this : 
the  whole  world  is  consuming  more  than  it  has  produced, 
and  is  consequently  in  a  state  of  impoverishment,  and  can 
not  buy  our  wares." 

Nearly  all  British  writers  dwell  upon  the  immense  losses 
to  British  farming  capital,  contingent  upon  deficient  crops 
since  1875,  and  the  decline  in  the  value  and  use  of  arable 
land  in  the  United  Kingdom,  and  concurrent  decline  in  the 
price  of  agricultural  produce,  due  to  foreign  competitive 
supplies,  as  prime  factors  in  accounting  for  trade  depression ; 
while,  throughout  much  of  the  testimony  given  before  the 
British  Commission  by  British  manufacturers  and  mer- 


TENDENCY  TO  MAGNIFY  LOCAL  INFLUENCES.     23 

chants,  the  injurious  influence  of  hostile  foreign  tariffs  on 
the  exports  of  British  manufactures,  and  the  competition  of 
foreign  manufactures  in  the  British  home  market,  are  con- 
tinually referred  to  as  having  been  especially  productive  of 
industrial  disturbance.  In  France,  the  principal  assigned 
causes  are,  excessive  speculation  prior  to  1873,  followed  by 
bad  crops ;  the  great  falling  off  in  the  production  of  wine 
through  the  destruction  of  vineyards  by  the  phylloxera ;  * 
a  serious  depression  of  the  silk-trade  industry ;  the  disap- 
pearance of  sardines  and  other  fish  from  the  coast  of  Brit- 
tany ;  excessive  taxation ;  excessive  increase  in  manufactured 
products ;  and  restricted  markets  due  to  the  competition  of 
foreign  nations  paying  less  wages.  In  Italy  a  succession  of 
bad  crops,  a  disease  among  the  silk- worms,  and  a  stagnation 
of  the  silk  industry,  are  prominently  cited ;  in  Denmark, 
bad  harvests,  a  disturbed  state  of  internal  politics,  an  altera- 
tion in  the  metallism  of  the  country  in  1873,  and  general 
over-production  of  manufactured  products,  are  popularly 
assigned  as  sufficient  causes;  and  in  Germany,  in  recent 
years,  to  fears  of  international  disturbances  and  decline  in 
the  prices  of  beet-root  sugar. 

Excessive  taxation  upon  trade  and  industry,  as  a  leading 
cause  of  trade  depression,  has  also  found  strong  advocacy, 
and  the  evidence  brought  forward  is  certainly  impressive. 
The  annual  burden  of  taxation  in  Europe  for  military  and 

*  A  writer  in  the  "  Economisto  Francais"  (1888)  estimates  the  total  loss  to 
France  from  the  ravages  of  the  phylloxera  since  18JJ5,  when  this  scourge  of 
the  French  vineyards  first  made  its  appearance,  at  the  enormous  sum  of 
10,000,000,000  francs,  or  about  I^OOOjOOOjOOpj  a  sum  nearly  double  the  amount 
of  the  war  indemnity  of  1871.  This  estimate  is  based  upon  French  official 
statistics  giving"  the  aggregate  area  of  vineyards  destroyed  in  the  country 
about  2,500,000  acres,  and,  on  the  assumption  that,  in  addition  to  the  acreage 
of  vines  thus  utterly  destroyed,  the  extent  of  vineyards  more  or  less  infested 
with  the  phylloxera  amountu  to  about  500,000  acres,  making  thus  together 
8,000,000  acres.  This  calamity  has  followed  very  closely  upon  the  losses  of 
the  war,  which,  in  addition  to  the  indemnity,  were  very  great ;  and  has  also 
been  concurrent  with  a  great  increase  in  public  expenditures  and  in  national 
taxation  every  yeur  since  tliat  period. 


24  RECENT  ECONOMIC  CHANGES. 

naval  purposes  at  the  present  time  is  estimated  as  at  least 
£200,000,000  ($1,000,000,000).  In  France,  the  complaints 
as  to  the  pressure  of  taxation  on  industry  are  universal. 
The  imperial  taxation  in  1884  was  reported  at  £120,000,000 
($600,000,000)  on  a  population  of  37,000,000.  Local  tax- 
ation in  France  is  also  very  heavy,  the  octroi  duties  for  Paris 
alone  for  the  year  1884  having  amounted  to  139,000,000 
francs  ($27,800,000),  in  addition  to  which  were  other  heavy 
municipal  taxes,  as,  for  example,  on  carriages,  horses,  cabs, 
dogs,  market-stalls,  funerals,  clubs,  canals,  the  keeping  of 
shops,  and  other  commodities  and  occupations. — Testimony 
of  J.  A.  Crowe,  British  Commission. 

In  Italy,  according  to  the  British  consul-general  at  Flor- 
ence (British  Commission),  the  income-tax  in  1884  was 
above  thirteen  per  cent,  and  the  land-tax  in  some  instances 
as  high  as  twenty-five  per  cent  upon  the  gross  rental.  These 
are  independent  of  local  taxation,  included  in  which  is  the 
octroi,  which  is  also  described  as  "  very  onerous,  and,  not 
being  confined  to  articles  of  food  only,  have  raised  a  quan- 
tity of  small  internal  barriers,  which,  in  a  minor  degree,  re- 
place the  customs  barriers  of  the  several  small  states  into 
which  the  country  was  formerly  divided." 

In  respect  to  Great  Britain,  the  British  Commission,  as 
the  result  of  their  investigations  into  this  matter,  says :  "  Of 
the  fact  of  the  increase,  especially  of  local  taxation,  there  is 
no  doubt.  At  the  same  time  it  will  probably  be  found  that, 
relatively  to  the  population  and  wealth  of  the  country,  the 
burden  of  taxation  is  now  far  lighter  than  in  any  previous 
periods." 

The  published  opinions  of  certain  persons  of  note  on  the 
subject  are  also  worthy  of  attention.  Mr.  Alfred  Eussel 
Wallace,  in  his  book  entitled  "  Bad  Times,"  London,  1885, 
expresses  the  opinion  that  among  the  most  efficient  causes 
for  the  current  depression  of  trade  are  "  wars  and  excessive 
armaments,  loans  to  despots  or  for  war  purposes,  and  the 
accumulation  of  vast  wealth  by  individuals." 


THE  RECOGNITION  OF  A  CAUSE  UNIVERSAL.       25 

Dr.  "Wirth,  of  Vienna,  finds  a  like  explanation  in  the  ex- 
cessive conversion,  or  rather  perversion,  of  private  wealth 
for  public  purposes.  Dr.  Engel,  of  Berlin,  regards  the  mill- 
ions wasted  in  war  by  France  and  Germany,  from  1870  to 
1871,  and  continued  and  prospective  expenditures  for  like 
purposes,  as  culminating  causes  of  almost  universal  business 
calamities ;  while,  in  the  opinion  of  Prof.  Thorold  Eogers, 
the  scarcity  and  consequent  dearness  of  gold  have  been  the 
factors  of  chief  importance. 

But  side  by  side  with  all  the  theories  that  the  "  depres- 
sion "  has  been  occasioned  by  the  destruction  or  non-pro- 
duction of  vast  amounts  of  property  by  wars,  "bad  harvests, 
strikes,  loss  of  capital  by  employment  in  worthless  enter- 
prises, the  conversion  of  an  undue  amount  of  circulating  cap- 
ital into  fixed  capital,  and  extravagant  consumption,  should 
be  placed  the  facts  that  statistics  not  only  fail  to  reveal  the 
existence  of  any  great  degree  of  scarcity  anywhere,  but,  on 
the  contrary,  prove  that  those  countries  in  which  depression 
has  been  and  is  most  severely  felt  are  the  very  ones  in  which 
desirable  commodities  of  every  description — railroads,  ships, 
houses,  live-stock,  food,  clothing,  fuel,  and  luxuries — have 
year  by  year  been  accumulating  with  the  greatest  rapidity, 
and  offered  for  use  or  consumption  at  rates  unprecedented  for 
cheapness.  If  lack  of  capital,  furthermore,  by  destruction 
or  perversion,  had  been  the  cause,  the  rate  of  profit  on  the 
use  of  capital  would  have  been  higher ;  but  the  fact  is,  that 
the  rate  of  profit  on  even  the  most  promising  kinds  of  capital 
during  recent  years  has  been  everywhere  exceptionally  low. 

Another  notable  tendency  among  investigators  is  to  as- 
sign to  clearly  secondary  causes  or  results,  positions  of  primary 
importance.  Thus  (general)  overjDrj^ductiojii*  or  an  amount 

*  No  term  has  been  used  more  loosely  in  the  discussion  of  this  subject  of 
trade  depression  than  that  of  "  over-production.'1''  The  idea  that  there  can  be 
such  a  thing  as  a  general  production  of  useful  or  desirable  commodities  in 
excess  of  what  is  wanted  is  an  absurdity  ;  but  there  may  be,  as  above  stated, 
an  amount  of  production  in  excess  of  demand  at  remunerative  prices,  or,  what 


26  RECENT  ECONOMIC  CHANGES. 

of  production  of  commodities  in  excess  of  demand  at  remu- 
nerative prices,  finds  greater  favor  as  an  agency  of  current 
economic  disturbance  than  any  other.  But  surely  all  nations 
and  people  could  not,  with  one  accord  and  almost  concur- 
rently, have  entered  upon  a  course  of  unprofitable  produc- 
tion without  being  impelled  by  an  agency  so  universal  and 
so  irresistible  as  to  almost  become  invested  with  the  charac- 
ter of  a  natural  law ;  and  hence  over-production  obviously, 
in  any  broad  inquiry,  must  be  accepted  as  a  result  rather 
than  a  cause.  And  so,  also,  in  respect  to  "  metallism  "  and 
the  enactment  of  laws  restrictive  of  commerce ;  for  no  one 
can  seriously  suppose  that  silver  has  been  demonetized  or 
tariffs  enacted  inadvertently,  or  at  the  whim  and  caprice  of 
individuals,  with  a  view  of  occasioning  either  domestic  or 
international  economic  disturbances ;  but,  on  the  contrary, 
the  only  reasonable  supposition  is,  that  antecedent  condi- 
tions or  agencies  have  prompted  to  action  in  both  cases,  by 
inducing  a  belief  that  measures  of  the  kind  specified  were 
in  the  nature  of  safeguards  against  threatened  economic 
evils,  or  as  helps  to,  at  least,  local  prosperity.  And  as  crop 
failures,  the  ravages  of  insects,  the  diseases  of  animals,  the 
disappearance  of  fish,  and  maladministration  of  govern- 
ment, are  local  and  not  necessarily  permanent,  they  must  all 
clearly,  in  any  investigation,  be  regarded  as  secondary  and 
not  primary  agencies.  In  short,  the  general  recognition,  by 
all  investigators,  that  the  striking  characteristic  of  the  eco- 
nomic disturbance  that  has  prevailed  since  1873  is  its  univer- 
sality, of  necessity  compels  a  recognition  of  the  fact  that  the 
agency  which  was  mainly  instrumental  in  producing  it  could 
not  have  been  local,  and  must  have  been  universal  in  its  in- 
fluence and  action.  And  the  question  of  interest  which  next 
presents  itself  is,  Can  any  such  agency,  thus  operative  and 
thus  potential,  be  recognized  ?  Let  us  inquire. 

is  substantially  the  same  thing,  an  excess  of  capacity  for  production  ;  or  the 
term  may  be  properly  used  to  indicate  a  check  on  the  distribution  of  products 
consequent  on  the  existence  of  such  conditions. 


II. 

The  place  in  history  of  the  years  from  1860  to  1885  inclusive  —  New  conditions 
of  production  and  distribution  —  The  prime  factors  of  economic  disturb- 
ance —  Illustrative  examples  —  The  Suez  Canal  —  Influences  of  the  telegraph 
on  trade  —  Economy  in  the  construction  and  management  of  vessels  —  Dis- 
appearance of  the  sailing-vessel  —  Revolution  in  the  carrying-trade  on 
land  —  The  annual  work  service  of  the  railroad  —  The  Bessemer  steel  rail  — 
Future  supply  of  food  commodities  —  Cheapening  of  iron  —  Displacement 
of  labor  by  machinery  —  Natural  gas  —  Application  of  machinery  to  the 
production  and  transportation  of  grain  —  Adam  Smith  and  the  manufacture 
of  pins  —  The  epoch  of  efficient  machinery  production  —  Influence  of  labor 
disturbances  on  inventions  —  Prospective  disturbing  agencies  —  Displace- 
ment of  the  steam-engine. 


the  historian  of  the  future  writes  the  history  of 
the  nineteenth  century  he  will  doubtless  assign  to  the  period 
embraced  by  the  life  of  the  generation  terminating  in  1885, 
a  place  of  importance,  considered  in  its  relations  to  the  in- 
terests of  humanity,  second  to  but  very  few,  and  perhaps  to 
none,  of  the  many  similar  epochs  of  time  in  any  of  the  cent- 
uries that  have  preceded  it  ;  inasmuch  as  all  economists 
who  have  specially  studied  this  matter  are  substantially 
agreed  that,  within  the  period  named,  man  in  general  has 
attained  to  such  a  greater  control  over  the  forces  of  Nature, 
and  has  so  compassed  their  use,  that  he  has  been  able  to  do 
far  more  work  in  a  given  time,  produce  far  more  product, 
measured  by  quantity  in  ratio  to  a  given  amount  of  labor, 
and  reduce  the  effort  necessary  to  insure  a  comfortable  sub- 
sisterice  in  a  far  greater  measure  than  it  was  possible  for 
him  to  accomplish  twenty  or  thirty  years  anterior  to  the 
time  of  the  present  writing  (1889).  In  the  absence  of 
sufficiently  complete  data,  it  is  not  easy,  and  perhaps  not 


28  RECENT  ECONOMIC  CHANGES. 

possible,  to  estimate  accurately,  and  specifically  state  the 
average  saving  in  time  and  labor  in  the  world's  work  of  pro- 
duction and  distribution  that  has  been  thus  achieved.  In  a 
few  departments  of  industrial  effort  the  saving  in  both  of 
these  factors  has  certainly  amounted  to  seventy  or  eighty 
per  cent ;  in  not  a  few  to  more  than  fifty  per  cent.*  Mr. 
Edward  Atkinson,  who  has  made  this  matter  a  special  study, 
considers  one  third  as  the  minimum  average  that  can  be 
accepted  for  the  period  above  specified,  f  Other  authorities 
are  inclined  to  assign  a  considerably  higher  average.  The 
deductions  of  Mr.  William  Fowler,  Fellow  of  University 
College,  London,  are  to  the  effect  that  the  saving  of  labor 
'since  1850  in  the  production  of  any  given  article  amounts 
to  forty  per  cent ;  J  and  the  British  Royal  Commission 

*  According  to  the  United  States  Bureau  of  Labor  (report  for  lg§6),  the 
gain  in  the  power  of  production  in  some  of  the  leading  industries  of  the  United 
States  "  duringthe  past  fifteen  or  twenty  years,"  as  measured  by  the  displace- 
ment of  the  muscular  labor  formerly  employed  to  effect  a  given  result  (i.  e., 
amount  of  product)  has  been  as  follows :  In  the  manufacture  of  agricultural 
implements,  from  fifty  to  seventy  per  cent ;  in  the  manufacture  of  shoes, 
eighty  per  cent ;  in  the  manufacture  of  carriages,  sixty -five  per  cent ;  inthe 
manufacture"  of  machines  and  machinery,  forty  per  cent ;  in  the  silk-manu- 
facture, fifty  per  cent,  and  so  on. 

t  In  a  print-cloth  factory  in  New  England,  in  which  the  conditions  of  pro- 
duction were  analyzed  by  Mr.  Atkinson,  the  product  per  hand  was  found  by 
liim  to  have  advanced  from  26,531  yards,  representing  3,382  hours'  work  in 
1871,  to  32,391  yards,  representing  2,695  hours'  work,  in  1884— an  increase  of 
twenty-two  per  cent  in  product,  and  a  decrease  of  twenty  per  cent  in  hours  of 
labor.  Converted  into  cloth  of  their  own  product,  the  wages  of  the  operatives 
in  this  same  mill  would  have  yielded  them  6,205  yards  in  1871,  as  compared 
with  9,737  yards  in  1884 — an  increase  of  5G$&  per  cent.  During  the  same 
period  of  years  the  prices  of  beef,  pork,  flour,  oats,  butter,  lard,  cheese,  and 
wool  in  the  United  States  declined  more  than  twenty-five  per  cent. 

A  like  investigation  by  the  same  authority  of  an  iron-furnace  in  Pennsyl- 
vania showed  that,  comparing  the  results  of  the  five  years  from  I860  to  1864 
with  the  five  years  from  1875  to  1879,  the  product  per  band  advanced  from  7.76 
tons  to  1,219  tons ;  that  the  gross  value  of  the  product  remained  about  the 
same ;  that  the  number  of  hands  was  reduced  from  seventy-six  to  seventy- 
one;  and  that  consumers  gained  a  benefit  of  reduction  in  price  from  $27.95 
per  ton  to  $19.08. 

J  "  Wages  have  greatly  increased,  but  the  cost  of  doing  a  given  amount  of 


THE  PLACE  IN  HISTORY  OP  THE  YEARS  1860-'85.     29 

(minority  report,  1886)  characterizes  the  amount  of  labor 
required  to  accomplish  a  given  amount  of  production  and 
transport  at  the  present  time  as  incomparably  less  than  was 
requisite  forty  years  ago,  and  as  "  being  constantly  reduced." 

But  be  this  as  it  may,  out  of  such  results  as  are  defi- 
nitely known  and  accepted  have  come  tremendous  industrial 
and  social  disturbances,  the  extent  and  effect  of  which — 
and  more  especially  of  the  disturbances  which  have  culmi- 
nated, as  it  were,  in  later  years — it  is  not  easy  to  appreciate 
without  the  presentation  and  consideration  of  certain  typical 
and  specific  examples.  To  a  selection  of  such  examples,  out 
of  a  large  number  that  are  available,  attention  is  accordingly 
next  invited. 

Let  us  go  back,  in  the  first  instance,  to  the  year  1869, 
when  an  event  occurred  which  was  probably  productive  of 
more  immediate  and  serious  economic  changes — industrial, 
commercial,  and  financial  —  than  any  other  event  of  this 
century,  a  period  of  extensive  war  excepted.  That  was  the 
opening  of  the  Suez  Canal.  Before  that  time,  and  since  the 
discovery  by  Vasco  da  Gama,  in  1498,  of  the  route  to  India 
by  the  Cape  of  Good  Hope,  all  the  trade  of  the  Western 
hemispheres  with  the  Indies  and  the  East  toiled  slowly  and 
uncertainly  around  the  Cape,  at  an  expenditure  in  time  of 
from  six  to  eight  months  for  the  round  voyage.  The  con- 
tingencies attendant  upon  such  lengthened  voyages  and 
service,  as  the  possible  interruption  of  commerce  by  war,  or 
failure  of  crops  in  remote  countries,  which  could  not  easily 
be  anticipated,  required  that  vast  stores  of  Indian  and  Chi- 
nese products  should  be  always  kept  on  hand  at  the  one 
spot  in  Europe  where  the  consumers  of  such  commodities 
could  speedily  supply  themselves  with  any  article  they  re- 
quired ;  and  that  spot,  by  reason  of  geographical  position 

work  has  greatly  decreased,  so  that  five  men  can  now  do  the  work  which 
would  have  demanded  the  labor  of  eight  men  in  1850.  If  this  be  correct,  the 
saving  oflubor  is  forty  percent  in  producing  any  given  article." — Appreciation 
of  Gold,  WILLIAM  FOWLEH,  Fellow  of  University  College,  London,  1886. 


30  RECENT  ECONOMIC  CHANGES. 

and  commercial  advantage,  was  England.  Out  of  this  con- 
dition of  affairs  came  naturally  a  vast  system  of  warehousing 
in  and  distribution  from  England,  and  of  British  banking 
and  exchange.  Then  came  the  opening  of  the  canal.  What 
were  the  results?  The  old  transportation  had  been  per- 
formed by  ships,  mainly  sailing-vessels,  fitted  to  go  round 
the  Cape,  and,  as  such  ships  were  not  adapted  to  the  Suez 
Canal,  an  amount  of  tonnage,  estimated  by  some  authorities 
as  high  as  two  million  tons,  and  representing  an  immense 
amount  of  wealth,  was  virtually  destroyed.*  The  voyage,  in 
place  of  occupying  from  six  to  eight  months,  has  been  so 
greatly  reduced  that  steamers  adapted  to  the  canal  now 
make  the  voyage  from  London  to  Calcutta,  or  vice  versa,  in 
less  than  thirty  days.  The  notable  destruction  or  great  im- 
pairment in  the  value  of  ships  consequent  upon  the  con- 
struction of  the  canal  did  not,  furthermore,  terminate  with 
its  immediate  opening  and  use ;  for  improvements  in  marine 
engines,  diminishing  the  consumption  of  coal,  and  so  ena- 
bling vessels  to  be  not  only  sailed  at  less  cost,  but  to  carry 
also  more  cargo,  were,  in  consequence  of  demand  for  quick 
and  cheap  service  so  rapidly  effected,  that  the  numerous  and 
expensive  steamer  constructions  of  1870-'73,  being  unable 
to  compete  with  the  constructions  of  the  next  two  years,  were 
nearly  all  displaced  in  1875-'76,  and  sold  for  half,  or  less 
than  half,  of  their  original  cost.  And  within  another  decade 
these  same  improved  steamers  of  1875-'76  have,  in  turn, 
been  discarded  and  sold  at  small  prices,  as  unfit  for  the 
service  of  lines  having  an  established  trade,  and  replaced 
with  vessels  fitted  with  the  triple-expansion  engines,  and 
saving  nearly  fifty  per  cent  in  the  consumption  of  fuel. 
And  now  "  quadruple-expansion  "  engines  are  beginning  to 

*  "  The  canal  may  therefore  be  said  to  have  given  a  death-blow  to  sailing- 
vessels,  except  for  a  few  special  purposes." — From  a  paper  by  Charles  Mag- 
niac,  indorsed  by  the  "London  Economist"  as  a  merchant  of  eminence  and 
experience,  entitled  to  speak  with  authority,  read  before  the  Indian  Section  of 
the  London  Society  of  Arts,  February,  1876. 


ECONOMIC  INFLUENCE  OF  THE  SUEZ  CANAL.       31 

be  introduced,  and  their  tendency  to  supplant  the  "  triple 
expansion  "  is  "  unmistakable." 

In  all  commercial  history,  probably  no  more  striking 
illustration  can  be  found  of  the  economic  principle,  that 
nothing  marks  more  clearly  the  rate  of  material  progress 
than  the  rapidity  with  which  that  which  is  old  and  has  been 
considered  wealth  is  destroyed  by  the  results  of  new  inven- 
tions and  discoveries.* 

Again,  with  telegraphic  communication  between  India 
and  China,  and  the  markets  of  the  Western  world,  permit- 
ting the  dealers  and  consumers  of  the  latter  to  adjust  to  a 
nicety  their  supplies  of  commodities  to  varying  demands, 
and  with  the  reduction  of  the  time  of  the  voyage  to  thirty 
days  or  less,  there  was  no  longer  any  necessity  of  laying  up 
great  stores  of  Eastern  commodities  in  Europe ;  and  with 
the  termination  of  this  necessity,  the  India  warehouse  and 
distribution  system  of  England,  with  all  the  labor  and  all 
the  capital  and  banking  incident  to  it,  substantially  passed 
away.  Europe,  and  to  some  extent  the  United  States,  ceased 
to  go  to  England  for  its  supplies.  If  Austria  wants  any- 
thing of  Indian  product,  it  stops  en  route,  by  the  Suez 
Canal,  at  Trieste ;  if  Italy,  at  Venice  or  Genoa ;  if  France, 
at  Marseilles ;  if  Spain,  at  Cadiz.  How  great  has  been  the 
disturbance  thus  occasioned  in  British  trade  is  shown  by  the 
following  figures  :  In  1871  the  total  exports  of  India  were 
£57,556,000,  of  which  £30,737,000  went  to  the  United 
Kingdom ;  but  in  1885,  on  a  total  Indian  export  of  £85,- 
087,000,  the  United  Kingdom  received  only  £31,882,000. 
During  the  same  time  the  relative  loss  on  British  exports  to 
India  was  less  than  a  million  and  a  half  sterling. 

As  a  rule,  also,  stocks  of  Indian  produce  are  now  kept, 

*  "  In  the  last  analysis  it  will  appear  that  there  is  no  such  thing  as  fixed 
capita^;  there  is  nothing  useful  that  is  very  old  except  the  precious  metals, 
andall  life  consists  in  the  conversion  offerees.  The  only  capital  which  is  of 
permanent  value  is  immaterial — the  experience  of  generations  and  tho  devel- 
ment  of  science." — EDWABD  ATKIMSON. 


32  RECENT  ECONOMIC  CHANGES. 

not  only  in  the  countries,  but  at  the  very  localities  of  their 
production,  and  are  there  drawn  upon  as  they  are  wanted 
for  immediate  consumption,  with  a  greatly  reduced  employ- 
ment of  the  former  numerous  and  expensive  intermediate 
agencies.*  Thus,  a  Calcutta  merchant  or  commission  agent 
at  any  of  the  world's  great  centers  of  commerce  contracts 
through  a  clerk  and  the  telegraph  with  a  manufacturer  in 
any  country — it  may  be  half  round  the  globe  removed — to 
sell  him  jute,  cotton,  hides,  spices,  cutch,  linseed,  or  other 
like  Indian  produce,  f  An  inevitable  steamer  is  sure  to  be 
in  an  Eastern  port,  ready  to  sail  upon  short  notice ;  the 
merchandise  wanted  is  bought  by  telegraph,  hurried  on 

*  In  illustration  of  this  curious  point,  attention  is  asked  to  the  following 
extract  from  a  review  of  the  trade  of  British  India,  for  the  year  1886,  from  the 
"  Times,"  of  India,  published  at  Bombay :  "  What  the  mercantile  commu- 
nity " — i.  e.,  of  Bombay — "  has  suifered  and  is  suffering  fromi  is  the  very  nar- 
row margin  which  now  exists  between  the  producer  and  consumer.  Twenty 
years  ago  the  large  importing  houses  held  stocks,  but  nowadays  nearly  every- 
thing is  sold  to  arrive,  or  bought  in  execution  of  native  orders,  and  the  bazaar 
dealers,  instead  of  European  importers,  have  become  the  holders  of  stocks. 
The  cable  and  canal  have  to  answer  for  the  transformation ;  while  the  ease 
with  which  funds  can  be  secured  at  home  by  individuals  absolutely  destitute 
of  all  knowledge  of  the  trade,  and  minus  the  capital  to  work  it,  has  resulted  in 
the  diminution  of  profits  both  to  importers  and  to  bazaar  dealers." 

t  Familiar  as  are  the  public  generally  with  the  operations  of  the  telegraph 
and  the  changes  in  trade  and  commerce  consequent  upon  its  submarine  exten- 
eion,  the  following  incident  of  personal  experience  may  present  certain  feat- 
ures with  which  they  are  not  acquainted :  In  the  winter  of  1884  the  writer 
journeyed  from  New  York  to  Washington  with  an  eminent  Boston  merchant 
engaged  in  the  Calcutta  trade.  Calling  upon  the  merchant  the  same  evening, 

after  arrival  in  Washington,  he  said :  "  Here  is  something,  Mr. ,  that  may 

interest  you.  Just  before  leaving  State  Street,  in  Boston,  yesterday  forenoon, 
I  telegraphed  to  my  agent  in  Calcutta,  '  If  you  can  buy  hides  and  gunny-bags 
at  —  price,  and  find  a  vessel  ready  to  charter,  buy  and  ship.'  When  I  arrived 
here  (Washington),  this  afternoon  (4  p.  M.  ),  I  found  awaiting  me  this  telegram 
from  my  partner  in  Boston,  covering  another  from  Calcutta,  received  in  answer 
to  my  dispatch  of  the  previous  day,  which  read  as  follows  :  '  Hides  and  gunny- 
bags  purchased,  vessel  chartered,  and  loading  begun.''  " 

Here,  then,  as  an  every-day  occurrence,  was  the  record  of  a  transaction  on 
the  other  side  of  the  globe,  the  correspondence  in  relation  to  which  traveled  a 
distance  equivalent  to  the  entire  circumference  of  the  globe,  all  completed  in  a 
space  of  little  more  than  twenty-four  hours  ! 


CHANGES  IN  EAST  INDIAN  COMMERCE.  33 

board  the  ship,  and  the  agent  draws  for  the  price  agreed 
upon,  through  some  bank  with  the  shipping  documents. 
In  four  weeks,  in  the  case  of  England,  and  a  lesser  time  for 
countries  intermediate,  the  shipment  arrives ;  the  manu- 
facturer pays  the  bill,  either  with  his  own  money  or  his 
banker's ;  and,  before  another  week  is  out,  the  cotton  and 
the  jute  are  going  through  the  factory ;  the  linseed  has  been 
converted  into  oil,  and  the  hides  in  the  tannery  are  being 
transformed  into  leather. 

Importations  of  East  Indian  produce  are  also  no  longer 
confined  in  England  and  other  countries  to  a  special  class 
of  merchants ;  and  so  generally  has  this  former  large  and 
special  department  of  trade  been  broken  up  and  dispersed, 
that  extensive  retail  grocers  in  the  larger  cities  of  Europe 
and  the  United  States  are  now  reported  as  drawing  their 
supplies  direct  from  native  dealers  in  both  China  and  India. 

Another  curious  and  recent  result  of  the  Suez  Canal 
construction,  operating  in  a  quarter  and  upon  an  industry 
that  could  not  well  have  been  anticipated,  has  been  its  effect 
on  an  important  department  of  Italian  agriculture — namely, 
the  culture  of  rice.  This  cereal  has  for  many  years  been  a 
staple  crop  of  Italy,  and  a  leading  article  of  Italian  export — 
the  total  export  for  the  year  1881  having  amounted  to  83,598 
tons,  or  167,196,000  pounds.  Since  the  year  1878,  however, 
rice  grown  in  Burmah,  and  other  parts  of  the  far  East,  has 
been  imported  into  Italy  and  other  countries  of  Southern 
Europe  in  such  enormous  and  continually  increasing  quan- 
tities, and  at  such  rates,  as  to  excite  great  apprehensions 
among  the  growers  of  Italian  rice,  and  largely  diminish  its 
exportation — the  imports  of  Eastern  rice  into  Italy  alone 
having  increased  from  11,957  tons  in  1878  to  58,095  tons  in 
1887.  For  France,  Italy,  and  other  Mediterranean  ports 
east,  the  importation  of  rice  from  Southern  Asia  (mainly 
from  Burmah)  was  152,147  tons  in  1887,  as  compared  with 
about  20,000  tons  in  1878. 

That  the  same  causes  are  also  exerting  a  like  influence 


34r  RECENT  ECONOMIC  CHANGES. 

upon  the  marketing  of  the  cereal  crops  of  the  United  States 
is  shown  by  the  circumstance  that  the  freight  rates  on  the 
transport  of  grain  from  Bombay  to  England,  by  way  of  the 
Suez  Canal,  declined  from  32-5  cents  per  bushel  in  1880,  to 
16-2  cents  in  1885 ;  and,  to  the  extent  of  this  decline,  the 
ability  of  the  Indian  ryot  to  compete  with  the  American 
grain-grower,  in  the  markets  of  Europe,  was  increased. 

How  great  was  the  disturbance  occasioned  in  the  general 
prices  of  the  commodities  that  make  up  Eastern  commerce 
by  the  opening  of  the  Suez  Canal,  and  how  quickly  prices  re- 
sponded to  the  introduction  of  improvements  in  distribution, 
is  illustrated  by  the  following  experience :  The  value  of  the 
total  trade  of  India  with  foreign  countries,  exclusive  of  its 
coasting-trade,  was  estimated,  at  the  time  of  the  opening  of 
the  canal  in  1869,  at  £105,500,000  ($527,500,000).  In  1874, 
however,  the  value  was  estimated  at  only  £95,500,000,  or  at 
a  reduction  of  ten  per  cent ;  and  the  inference  might  natu- 
rally have  been  that  such  a  large  reduction  as  ten  millions 
sterling  ($50,000,000)  in  five  years,  with  a  concurrent  in- 
crease in  the  world's  population,  could  only  indicate  a  reduc- 
tion of  quantities.  But  that  such  was  not  the  case  was 
shown  by  the  fact  that  250,000  tons  more  shipping  (mainly 
steam,  and  therefore  equivalent  to  at  least  500,000  more 
tons  of  sail)  was  employed  in  transporting  commodities  be- 
tween India  and  foreign  countries  in  1874  than  in  1869 ; 
or,  that  while  the  value  of  the  trade,  through  a  reduction  of 
prices  had  notably  declined  during  this  period,  the  quanti- 
ties entering  into  trade  had  so  greatly  increased  during  the 
same  time,  that  250,000  tons  more  shipping  were  required 
to  convey  it. 

In  short,  the  construction  of  the  Suez  Canal  completely 
revolutionized  one  of  the  greatest  departments  of  the  world's 
commerce  and  business ;  absolutely  destroying  an  immense 
amount  of  what  had  previously  been  wealth,  and  displacing 
or  changing  the  employment  of  millions  of  capital  and 
thousands  of  men;  or,  as  the  London  "Economist"  has 


ECONOMY  IN  MARINE  CARRIAGES.  35 

expressed  it,  "  so  altered  and  so  twisted  many  of  the  existing 
modes  and  channels  of  business  as  to  create  mischief  and 
confusion  "  to  an  extent  sufficient  to  constitute  one  great 
general  cause  for  a  universal  commercial  and  industrial  de- 
pression and  disturbance. 

The  deductions  from  the  most  recent  tonnage  statistics 
of  Great  Britain  come  properly  next  in  order  for  considera- 
tion. During  the  ten  years  from  1870  to  1880,  inclusive, 
the  British  mercantile  marine  increased  its  movement,  in 
the  matter  of  foreign  entries  and  clearances  alone,  to  the 
extent  of  22,000,000  tons ;  or,  to  put  it  more  simply,  the 
British  mercantile  marine  exclusively  engaged  in  foreign 
trade  did  so  much  more  work  within  the  period  named ; 
and  yet  the  number  of  men  who  were  employed  in  effecting 
this  great  movement  had  decreased  in  1880,  as  compared 
with  1870,  to  the  extent  of  about  three  thousand  (2,990  ex- 
actly). What  did  it?  The  introduction  of  steam  hoisting- 
machines  and  grain-elevators  upon  the  wharves  and  docks, 
and  the  employment  of  steam-power  upon  the  vessels  for 
steering,  raising  the  sails  and  anchors,  pumping,  and  dis- 
charging the  cargo ;  or,  in  other  words,  the  ability,  through 
the  increased  use  of  steam  and  improved  machinery,  to  carry 
larger  cargoes  in  a  shorter  time,  with  no  increase — or,  rather, 
an  actual  decrease — of  the  number  of  men  employed  in  sail- 
ing or  managing  the  vessels. 

Statistical  investigations  of  a  later  date  furnish  even 
more  striking  illustrations  to  the  same  effect  from  this  in- 
dustrial specialty.  Thus,  for  1870,  the  number  of  hands 
(exclusive  of  masters)  employed  to  every  one  thousand  tons 
capacity,  entered  or  cleared  of  the  British  steam  mercantile 
marine,  is  reported  to  have  been  forty-seven,  but  in  1885  it 
was  only  27'7,  or  seventy  per  cent  more  manual  labor  was 
required  in  1870  than  in  1885  to  do  the  same  work.  In 
sailing-vessels  the  change,  owing  to  a  lesser  degree  of  im- 
provement in  the  details  of  navigation,  has  been  naturally 
smaller,  but  nevertheless  considerable  ;  twenty-seven  hands 


36  RECENT  ECONOMIC  CHANGES. 

being  required  in  1885  as  against  thirty-five  in  1870  for  the 
same  tonnage  entered  or  cleared.*  Another  fact  of  inter- 
est is,  that  the  recent  increase  in  the  proportion  of  large 
vessels  constructed  has  so  greatly  increased  the  efficiency 
of  shipping,  and  so  cheapened  the  cost  of  sea-carriage,  to 
the  advantage  of  both  producers  and  consumers,  that  much 
business  that  was  before  impossible  has  become  quite  pos- 
sible. Of  the  total  British  tonnage  constructed  in  1870, 
only  six  per  cent  was  of  vessels  in  excess  of  two  thousand 
tons  burden ;  but  in  1884  fully  seventeen  per  cent  was  of 
vessels  of  that  size,  or  larger.  Meanwhile,  the  cost  of  new 
iron  (or  steel)  ships  has  been  greatly  reduced;  from  $90 
per  ton  in  1872-'74  to  $65  in  1877,  $57  in  1880,  while 
in  1887  first-class  freighting  screw- steamers,  constructed 
of  steel,  fitted  with  triple  compound  engines,  with  largely 
increased  carrying  capacity  (in  comparison  with  former  iron 
construction)  and  consequent  earning  power,  and  capable 
of  being  worked  at  less  expense,  could  have  been  furnished 
for  $33.95  per  ton.f 

*  The  official  statistics  do  not  show  in  the  British  mercantile  marine 
whether  the  economy  of  labor  which  was  effected  prior  to  1886  has  continued  to 
be  progressive;  inasmuch  as  the  totals  for  1886-' 88  include  Lascars  and  Asi- 
atics under  Asiatic  articles  of  agreement ;  allowing  for  this,  however,  the  pro- 
portion of  men  employed  to  every  one  thousand  tons  of  shipping  was  consid- 
erably smaller  in  the  years  1886-'87  than  in  1884-'85. 

t  The  following  is  a  copy  of  a  circular  issued  in  October,  1887,  by  the  rep- 
resentatives in  New  York  of  a  well-known  iron-ship-building  firm  at  Newcas- 
tle-on-Tyne,  England : 

"  Inviting  your  attention  to  the  inclosed  particulars  of  two  steel  screw 
freight  steamers  building  to  our  order,  by  the  well-known  builders,  Messrs. 
,  of  Newcastle-on-Tyne,  we  beg  to  give  you  some  additional  details : 

"  The  contract  price  is  £34,250  each,  which  is  just  about  £6  17s.  (six 
pounds  seventeen  shillings  sterling)  a  ton  dead-weight  capacity,  and  including 
all  expenses  up  to  time  of  delivery,  will  not  exceed  £7  a  ton  dead  weight,  or 
at  present  rate  of  exchange,  $33.95  American  money. 

"  Thus  it  will  be  seen  that  as  regards  the  cost  of  these  vessels,  while  of 
large  carrying  capacity  and  consequent  earning  power,  and  fitted  as  they  will 
be  with  engines  of  the  newest  type  and  with  all  modern  appliances  which 
have  been  tried  and  found  conducive  to  quick  and  economical  working  (while 
avoiding  all  innovations  of  an  experimental  character),  the  present  price  of 


ECONOMY  IN  CONSTRUCTION  OP  VESSELS.         37 

Prior  to  about  the  year  1875  ocean-steamships  had  not 
been  formidable  as  freight-carriers.  The  marine  engine  was 
too  heavy,  occupied  too  much  space,  consumed  too  much 
coal.  For  transportation  of  passengers,  and  of  freight  hav- 
ing large  value  in  small  space,  they  were  satisfactory ;  but 
for  performing  a  general  carrying-trade  of  the  heavy  and 
bulky  articles  of  commerce  they  were  not  satisfactory.  A 
steamer  of  the  old  kind,  capable  of  carrying  three  thou- 
sand tons,  might  sail  on  a  voyage  so  long  that  she  would  be 
compelled  to  carry  twenty-two  hundred  tons  of  coal,  leaving 
room  for  only  eight  hundred  tons  of  freight ;  whereas,  at 
the  present  time,  &  steamer  with  the  compound  engines  and 
all  other  modern  improvements,  can  make  the  same  voyage 
and  practically  reverse  the  figures — that  is,  carry  twenty-two 
hundred  tons  of  freight  with  a  consumption  of  only  eight 
hundred  tons  of  coal.  The  result  of  the  construction  and  use 
of  compound  engines  in  economizing  coal  has  been  illus- 

not  over  £7  per  ton,  dead-weight  capacity,  as  against  £12  to  £13  a  few  years 
ago,  renders  the  difference  in  values  relatively  even  greater  than  appears  at 
first  sight." 

A  brief  examination  of  what  is  embraced  in  the  construction  of  these  ves- 
sels is  not  a  little  interesting  and  instructive,  especially  to  those  who  recall 
what  was  deemed  but  a  comparatively  few  years  ago  the  very  best  conditions 
for  ocean  steam  navigation :  Triple-expansion  engines — three  cylinders — of 
the  latest  and  most  approved  type.  Horse-power,  1,700.  Propeller  shifting 
blades  and  spare  set ;  each  part  of  engines  interchangeable.  Two  double-ended 
steel  boilers,  in  the  corrugated  furnaces,  to  work  at  one  hundred  and  fifty 
pounds  pressure.  Four  steam  winches  of  most  approved  pattern  and  large 
power.  Steam  steering-gear  forward,  and  powerful  hand-gear  aft.  Patent 
stockless  anchors,  working  direct  into  hawser  pipes,  effecting  great  saving  in 
time,  labor,  and  gear.  Water-ballast  in  double  bottom.  Lighthouses  on 
forecastle.  Decks  of  steel  throughout;  height,  seven  feet,  nine  inches,  being 
the  suitable  height  for  passengers,  horses,  and  cattle.  Ventilation  of  holds 
specially  provided  through  automatic  exhaustion  by  means  of  the  funnel. 
Hatches  of  large  dimensions  capable  of  taking  in  locomotives  or  other  largo 
pieces  of  machinery.  Six  steel  bulkheads,  with  longitudinal  bulkheads 
throughout  holds  and  between  decks.  Coal  consumption,  twenty-two  tons 
per  day.  Coal-bunkers  sufficient  for  forty  days'  steaming ;  outfit  in  sails,  steel 
hawsers,  oil  and  water  tanks,  loading  and  discharging  gear,  cutlery,  plate, 
china,  and  glass,  and  optician's  stores — all  of  the  best  makers  and  full  supply. 
8 


38  RECENT  ECONOMIC  CHANGES. 

trated  by  Sir  Lyon  Playfair,  by  the  statement  that  "  a  small 
cake  of  coal,  which  would  pass  through  a  ring  the  size  of  a 
shilling,  when  burned  in  the  compound  engine  of  a  modern 
steamboat  would  drive  a  ton  of  food  and  its  proportion  of 
the  ship  two  miles  on  its  way  from  a  foreign  port."  *  Another 
calculator,  says  the  London  "  Engineer,"  has  computed  that 
half  a  sheet  of  note-paper  will  develop  sufficient  power, 
when  burned  in  connection  with  the  triple-expansion  en- 
gine, to  carry  a  ton  a  mile  in  an  Atlantic  steamer.  How, 
under  such  circumstances,  the  charge  for  sea-freights  on 
articles  of  comparatively  high  value  has  been  reduced,  is 
shown  by  the  fact  that  the  ocean  transport  of  fresh  meats 
from  New  York  to  Liverpool  does  not  exceed  1  cent  ($d.) 
per  pound ;  and  including  commissions,  insurance,  and  all 
other  items  of  charge,  does  not  exceed  2  cents  (Id.)  per 
pound.  Boxed  meats  have  also  been  carried  from  Chicago 
to  London  as  a  regular  business  for  50  cents  per  100  pounds. 
In  1860  6d.  (12  cents)  per  bushel  was  about  the  lowest  rate 
charged  for  any  length  of  time  for  the  transportation  of 

*  An  interesting  example  of  the  comparative  economy  of  the  old  and  more 
modern  style  of  oscillating  marine  engines  was  lately  furnished  by  an  instance 
quoted  by  Mr.  J.  W.  T.  Harvey,  before  the  Engineering  Section  of  the  Bristol 
(England)  Naturalists'  Society.  The  Juno  was  originally  worked  with  a  jet 
condenser;  after  a  time  this  was  replaced  by  a  surface  condenser,  and  finally 
the  engines  were  compounded.  Thus  we  have  the  same  vessel  working  under 
three  different  conditions,  and  any  alteration  of  coal  consumption  must  be  due 
to  the  changes  in  her  machinery.  The  engines  originally  worked  at  thirty 
pounds  per  square  inch,  and  indicated  1,605  horse-power ;  they  drove  the 
vessel  at  14-1  knots,  using  ninety-two  tons  of  coal  per  voyage.  Subsequently 
new  boilers  and  a  surface  condenser  were  fitted  to  the  ship,  the  pressure  being 
thirty  pounds ;  the  same  horse-power  and  speed  were  then  maintained  with  a 
consumption  of  eighty-two  and  a  half  tons  of  coal  per  voyage — a  saving  of  nine 
and  a  half  tons,  or  nine  per  cent.  As  competition  in  the  carrying-trade  became 
keener,  this  coal  consumption  could  not  be  afforded,  and  it  was  determined  to 
compound  the  engines  as  inexpensively  as  possible.  This  was  done,  and  the 
engines  now  gave  1,270  horse-power,  or  335  horse-power  less  than  before,  and 
drove  the  ship  at  13-4  knots,  or  0'7  knot  slower,  on  a  consumption  of  forty- 
nine  tons  of  coal  per  voyage.  The  coal  consumption  per  horse-power,  there- 
fore, varied  under  the  three  conditions  as  100,  91,  67.  The  consumption  per 
voyage  varied  as  100,  91,  53. 


DISAPPEARANCE  OP  THE  SAILING-VESSEL.         39 

bulk  grain  from  New  York  to  Liverpool,  and  for  a  part  of 
that  year  the  rate  ran  up  as  high  as  13^-c?.  (27  cents)  per 
bushel.  But  for  the  year  1886  the  average  rate  for  the  same 
service  was  Z$d.  (5  cents)  per  bushel ;  while  in  April,  1888, 
the  rate  on  grain  from  New  York  to  Liverpool  by  steam 
declined  to  as  low  a  figure  as  %d.  per  bushel  of  60  pounds ; 
f  d.  to  Antwerp,  and  \d.  to  Glasgow.  It  seems  almost  need- 
less to  add  that  these  rates  were  much  below  the  actual  cost 
of  carriage.  In  like  manner,  the  cost  of  the  ocean  trans- 
portation of  tea  from  China  and  Japan,  or  sugar  from  Cuba, 
or  coffee  from  Brazil,  has  been  greatly  reduced  by  the  same 
causes. 

The  above  are  examples  on  a  large  scale  of  the  disturb- 
ing influence  of  the  recent  application  of  steam  to  maritime 
industries.  The  following  is  an  example  drawn  from  com- 
paratively one  of  the  smallest  of  the  world's  industries,  pros- 
ecuted in  one  of  the  most  out-of-the-way  places  :  The  seal- 
fishery  is  a  most  important  industrial  occupation  and  source 
of  subsistence  to  the  poor  and  scant  population  of  New- 
foundland. Originally  it  was  prosecuted  in  small  sailing- 
vessels,  and  upward  of  a  hundred  of  such  craft,  employing 
a  large  number  of  men,  annually  left  the  port  of  St.  John's 
for  the  seal-hunt.  Now,  few  or  no  sailing-vessels  engage  in 
the  business  ;  steamers  have  been  substituted,  and  the  same 
number  of  seals  are  taken  with  half  the  number  of  men  that 
were  formerly  needed.  The  consequence  is,  a  diminished 
opportunity  for  a  population  of  few  resources,  and  to  obtain 
"  a  berth  for  the  ice,"  as  it  is  termed,  is  considered  as  a  favor. 

Is  it,  therefore,  to  be  wondered  at,  that  the  sailing-vessel 
is  fast  disappearing  from  the  ocean ;  *  that  good  authorities 
estimated  in  1886  that  the  tonnage  then  afloat  was  about 
twenty-five  per  cent  in  excess  of  all  that  was  needed  to  do 

*  The  statistics  of  the  world's  shipping  show  that  in  1885  there  were 
26,766  sailing-vessels,  of  11,216,618  tons ;  in  1886  there  were  25,155,  of  10,411,- 
807  tons;  and  in  1887  there  were  23,810,  of  9,820,492.  The  decrease  in  two 
years  was  therefore  1,396,123,  or  12'4  per  cent. 


40  RECENT  ECONOMIC  CHANGES. 

the  then  carrying-trade  of  the  world  ;  and  that  ship-owners 
everywhere  were  unanimously  of  the  opinion  that  the  de- 
pression of  industry  was  universal  ? 

[During  the  year  1888,  from  causes  that  must  be  regarded  as  ex- 
ceptional (and  which  will  be  hereafter  noticed),  an  increased  demand 
for  shipping  accommodation  suddenly  sprang  up,  and  which,  not  being 
readily  supplied,  was  followed  by  an  almost  continued  advance  in 
freight  rates,  until  in  many  directions — i.  e.,  in  the  Russian  grain  and 
Eastern  trade — the  rise  was  equal  to  one  hundred  per  cent  advance 
upon  the  rates  current  in  1887  and  the  early  months  of  1888.  This 
condition  of  affairs  in  turn  gave  a  great  impulse  to  ship-building, 
especially  in  Great  Britain,  where  the  construction  for  1888  amounted 
to  903,687  tons,  as  against  637,000  in  1887 ;  an  extent  of  annual  in- 
crease that,  except  in  two  instances,  has  never  been  exceeded.  The 
additional  tonnage  thus  supplied  proving  in  excess  of  the  world's  de- 
mand, the  advance  in  freights  in  1888  was  in  a  great  measure  lost  in 
the  first  six  months  of  1889.] 

Great,  however,  as  has  been  the  revolution  in  respect  to 
economy  and  efficiency  in  the  carrying-trade  upon  the  ocean, 
the  revolution  in  the  carrying-trade  upon  land  during  the 
same  period  has  been  even  greater  and  more  remarkable. 
Taking  the  American  railroads  in  general  as  representative 
of  the  railroad  system  of  the  world,  the  average  charge  for 
moving  one  ton  of  freight  per  mile  has  been  reduced  from 
about  2j5  cents  in  1869  to  1-06  in  1887;  or,  taking  the  re- 
sults on  one  of  the  standard  roads  of  the  United  States  (the 
New  York  Central),  from  1-95  in  1869  to  0-68  in  1885.* 
To  grasp  fully  the  meaning  and  significance  of  these  figures, 
I  their  method  of  presentation  may  be  varied  by  saying  that 
two  thousand  pounds  of  coal,  iron,  wheat,  cotton,  or  other 
commodities,  can  now  be  carried  on  the  best  managed  rail- 
ways for  a  distance  of  one  mile,  for  a  sum  so  small,  that 
outside  of  China  it  would  be  difficult  to  find  a  coin  of  equiv- 

*  On  certain  of  the  railroads  of  the  United  States  an  even  lower  average  rate 
of  freight  has  been  reported.  Thus,  for  the  year  J886  the  Michigan  Central 
Eailroad  reported  0-56  cent  as  their  average  rate  per  ton  per  mile  for  that  year, 
and  the  Lake  Shore  and  Michigan  Southern  Eailroad  0-55  cent  for  like  service. 


REVOLUTION  IN  THE  CARRYING-TRADE  ON  LAND.  41 

alent  value  to  give  to  a  boy  as  a  reward  for  carrying  an  ( 
ounce  package  across  a  street,  even  if  a  man  or  boy  could  I 
be  found  in  Europe  or  the  United  States  willing  to  give  or  ( 
accept  so  small  a  compensation  for  such  a  service. 

The  following  ingenious  method  of  illustrating  the  same 
results  has  been  also  suggested :  The  number  of  miles  of 
railroad  in  operation  in  various  parts  of  the  world  in  1885 
was  probably  about  300,000.*    Eeckoning  their  capacity  for 
transportation  at  a  rate  not  greater  than  the  results  actually 
achieved  in  that  same  year  in  the  United  States,  it  would 
appear  that  the  aggregate  railroad  system  of  the  world  could 
easily  have  performed  work  in  1885  equivalent  to  transport- 
ing 120,000,000,000  tons  one  mile.     "  But  if  it  is  next  con-  j 
sidered  that  it  is  a  fair  day's  work  for  an  ordinary  horse  to  V** 
haul  aj;on  6^7  miles,  year  in  and  year  out,  it  further  appears  j    --j 
that  the  railways  have  added  to  the  power  of  the  human    ' 
race,  for  the  satisfaction  of  its  desires  by  the  cheapening  of  ' 
products,  a  force  somewhat  greater  than  that  of  a  horse 
working  twelve  days  yearly  for  every  inhabitant  of  the 
globe." 

In  the  year  1887  the  freight-transportation  by  the  rail- 
roads of  the  United  States  (according  to  Poor's  "  Manual ") 
was  equivalent  to  60,061,069,996  tons  carried  one  mile ; 
while  the  population  for  that  year  was  somewhat  in  excess 
of  60,000,000.  The  railroad  freight  service  of  the  United 
States  for  1887  was  therefore  equivalent  to  carrying  a  thou- 
sand tons  one  mile  for  every  person,  or  every  ton  a  thousand 
miles.  The  average  cost  of  this  service  was  about  $10  per 
annum  for  every  person.  But  if  it  had  been  entirely  per- 
formed by  horse-power,  even  under  the  most  favorable  of  \ 
old-time  conditions,  its  cost  would  have  been  about  $200  to 
each  inhabitant,  which  in  turn  would  represent  an  expendi- 


*  The  world's  railway  mileage  for  January,  1889,  was  probaly  in  excess  of 
850,000.  miles.  At  the  same  date  the  telegraph  system  of  the  world  comprised 
at  least  600,000  miles  of  length  of  line. 


42  RECENT  ECONOMIC  CHANGES. 

» 

ture  greater  than  the  entire  value  of  the  then  annual  prod- 
juct  of  the  country;  or,  in  other  words,  all  that  the  peo- 
ple of  the  United  States  earned  in  1887  would  not  pay  the 
cost  of  transportation  alone  of  the  amount  of  such  serv- 
ice rendered  in  that  year,  had  it  been  performed  by  horse- 
power exclusively.* 

Less  than  half  a  century  ago,  the  railroad  was  practically 
unknown,  f  It  is,  therefore,  within  that  short  period  that 
this  enormous  power  has  been  placed  at  the  disposal  of 
every  inhabitant  of  the  globe  for  the  cheapening  of  trans- 
portation to  him  of  the  products  of  other  people  and  coun- 
tries, and  for  enabling  him  to  market  or  exchange  to  better 
advantage  the  results  of  his  own  labor  or  services.  As  the 
extension  of  the  railway  system  has,  however,  not  been  equal 
in  all  parts  of  the  world — less  than  thirty  thousand  miles 
existing,  at  the  close  of  1887,  in  Asia,  Africa,  and  Australia 
combined — its  accruing  benefits  have  not,  of  course,  been 
equal.  And  while  all  the  inhabitants  of  the  globe  have  un- 
doubtedly been  profited  in  a  degree,  by  far  the  greater  part 
of  the  enormous  additions  that  have  been  made  to  the 
world's  working  force  through  the  railroad  since  1840,  have 
accrued  to  the  benefit  of  the  people  of  the  United  States, 
and  of  Europe — exclusive  of  Eussia,  Turkey,  and  the  former 
Turkish  provinces  of  Southeastern  Europe — a  number  not 
much  exceeding  two  hundred  millions,  or  not  a  quarter  part 
of  the  entire  population  of  the  globe.  The  result  of  this 
economic  change  has  therefore  been  to  broaden  and  deepen 

*  One  further  interesting  corollary  of  this  exhibit  is,  that  the  average  re- 
turn, in  the  form  of  interest  and  dividends,  on  the  enormous  amount  of  capital 
which  has  been  actually  expended  in  order  that  the  present  railway  service  in 
the  United  States  may  be  performed,  can  not  be  estimated  as  in  excess  of 
four  per  cent  per  annum  as  a  maximum. 

t  As  late  as  1840  there  were  in  operation  only  about  2,860  miles  of  railway 
in  America,  and  2,130  in  Europe,  or  a  total  of  4,990  miles.  For  practical  pur- 
poses, it  may  therefore  be  said  that  the  world's  railway  system  did  not  then 
exist ;  while  its  organization  and  correspondence  for  doing  full  and  efficient 
work  must  be  referred  to  a  much  later  period. 


THE  BESSEMER  STEEL  RAIL.  43 

rather  than  diminish  the  line  of  separation  between  the 
civilized  and  the  semi-civilized  and  barbarous  nations. 

Now,  while  a  multiplicity  of  inventions  and  of  experi- 
ences have  contributed  to  the  attainment  of  such  results 
under  this  railroad  system  of  transportation,  the  discovery 
of  a  method  of  making  steel  cheap  was  the  one  thing  which 
was  absolutely  essential  to  make  them  finally  possible ;  inas- 
much as  the  cost  of  frequently  replacing  rails  of  iron  would 
have  entailed  such  a  burden  of  expenditure  as  to  have  ren- 
dered the  present  cheapness  of  railway  transportation  utterly 
unattainable.  Note,  therefore,  how  rapidly  improvements 
in  processes  have  followed  the  discovery  of  Bessemer,  until, 
on  the  score  of  relative  first  cost  alone,  it  has  become  eco- 
nomical to  substitute  steel  for  iron  in  railroad  construction. 
In  1873  Bessemer  steel  in  England,  where  its  price  has  not 
been  enhance^  by  protective^  duties,  commanded  $80  per 
ton ;  in  1886  it  was  profitably  manufactured  and  sol  dm  the 
same  country  for  less  than  IgO^per  ton  !  *  Within  the  same 
time  the  annual  producing  capacity  of  a  Bessemer  converter 
has  been  increased  fourfold,  with  no  increase  but  rather  a 
diminution  of  the  involved  labor ;  and,  by  the  Gilchrist- 
Thomas  process,  four  men  can  now  make  a  given  product 
of  steel  in  the  same  time  and  with  less  cost  of  material  than 
it  took  ten  men  ten  years  ago  to  accomplish.  A  ton  of  steel 
rails  can  now  also  be  made  with  five  thousand  pounds  of  coal, 
as  compared  with  ten  thousand  pounds  in  18G8. 

"  The  importance  of  the  Bessemer  invention  of  steel  can  be  best 
understood  by  looking  at  the  world's  production  of  that  metal  in  1887. 

*  The  average  price  of  iron  rails  in  Great  Britain  for  the  year  1883  was  £5 
per  ton  ;  steel  rails  in  the  same  market  sold  in  1886  for  £4=  5*.  per  ton  ;  and  in 
1887  sales  of  steel  rails  were  made  in  Belgium  for  £3  16*.  (f  18.75)  per  ton, 
deliverable  at  the  works.  The  average  price  of  steel  rails  in  Pennsylvania 
(U.  S.)  at  the  works,  for  1886,  with  a  tariff  on  imports  of  $17  per  ton,  was  $34>£ 
per  ton.  Since  the  beginning  of  1883  the  manufacture  of  iron  rails  in  the 
United  States  has  been  almost  entirely  discontinued,  and  during  the  years 
from  1883  to  1888  there  were  virtually  no  market  quotations  for  them.  The 
last  recorded  average  price  for  iron  rails  was  $45)^  per  ton  in  1882. 


44  RECENT  ECONOMIC  CHANGES. 

The  production  of  Bessemer  steel  in  the  eight  chief  iron  and  steel 
producing  countries  of  the  world  amounted  in  that  year  to  7,269,767 
tons,  as  compared  with  6,034,115  tons  in  1886,  showing  an  increase  of 
1,260,094  tons,  or  twenty  per  cent.  The  saving  effected  by  railway 
companies  by  the  use  of  Bessemer  metal  and  the  additional  security 
gained  thereby  is  shown  by  the  fact  that  a  locomotive  on  the  Great 
Northern  Railway  has  accomplished,  with  a  moderate  train-load  of 
passenger-coaches,  a  statute  mile  in  fifty  seconds,  or  at  the  rate  of 
seventy-two  miles  per  hour,  and  makes  a  considerable  continuous  run 
at  a  speed  of  one  mile  per  minute — a  rate  of  railway  traveling  almost 
beyond  the  dreams  or  anticipations  of  the  renowned  George  Stephen- 
son."  The  use  of  steel  in  place  of  iron  in  ship-construction  may  be 
said  to  date  from  1878,  and  the  rapidity~witn  which  the  former  has 
replaced  the  latter  metal  is  very  remarkable.  Thus,  in  1878  "  the  per- 
centage of  steel  used  in  the  construction  of  steamships  in  Great  Britain 
was  only  1'09,  but  in  1887  the  percentage  of  iron  used  in  proportion  to 
steel  was  only  0'93 ;  or,  in  other  words,  in  1878  there  was  ninety  times 
as  much  iron  as  steel  used  for  steamers,  but  in  1887  there  was  more 
than  eight  times  the  quantity  of  steel  used  as  compared  with  iron  for 
the  same  purpose,  and,  as  regards  sailing-ships,  the  quantity  of  steel 
used  in  1887  amounted  to  practically  one  half  that  of  iron." — Address 
of  the  President  (Mr.  Adamsori)  of  the  British  Iron  and  Steel  Asso- 
ciation, May,  1S88, 

The  power  capable  of  being  exerted  by  the  steam-engines 
of  the  world  in  existence  and  working  in  the  year  188J*  has 
been  estimated  by  the  Bureau  of  Statistics  at  Berlin  as 
equivalent  to  that  of  46,000,000  horses,  representing  ap- 
proximately 1,000,000,000  men ;  or  at  least  three  times  the 
working  population  of  the  earth,  whose  total  number  of  in- 
habitants is  probably  about  1,460,000,000.  The  application 
and  use  of  steam  alone  up  to  date  (1889)  has  accordingly 
more  than  trebled  man's  working  power,  and  by  enabling 
him  to  economize  his  physical  strength  has  given  him 
greater  leisure,  comfort,  and  abundance,  and  also  greater 
opportunity  for  that  mental  training  which  is  essential  to  a 
higher  development.  And  yet  it  is  certain  that  four  fifths 
of  the  steam-engines  now  working  in  the  world  have  been 
constructed  during  the  last  quarter  of  a  century,  or  since 
1865. 


PREVENTION  OP  FAMINES.  45 

One  of  the  most  momentous  and  what  may  be  called 
humanitarian  results  of  the  recent  great  extension  and 
cheapening  of  the  world's  railway  system  and  service  is,  that 
there  is  now  no  longer  any  occasion  for  the  people  of  any 
country  indulging  in  either  excessive  hopes  or  fears  as  to 
the  results  of  any  particular  harvest ;  inasmuch  as  the  fail- 
ure of  crops  in  any  one  country  is  no  longer,  as  it  was,  no 
later  than  twenty  years  ago,  identical  with  high  prices  of 
grain ;  the  prices  of  cereals  being  at  present  regulated,  not 
within  any  particular  country,  but  by  the  combined  produc- 
tion and  consumption  of  all  countries  made  mutually  acces- 
sible by  railroads  and  steamships.  As  a  matter  of  fact,  in- 
deed, the  granaries  for  no  small  portion  of  the  surplus  stock 
of  the  world's  cereals  are  at  the  present  time  ships  and  rail- 
road-cars in  the  process  of  movement  to  the  points  of  great- 
est demand  for  consumption.  Hence  it  is  that,  since  1870, 
years  of  locally  bad  crops  in  Europe  have  generally  witnessed 
considerably  lower  prices  than  years  when  the  local  crops 
were  good,  and  there  was  a  local  surplus  for  export.* 

In  short,  one  marked  effect  of  the  present  railroad  and 
steamship  system  of  transportation  has  been  to  compel  a 

*  A  century  ago  every  nation  of  Europe  raised  in  ordinary  years  enough 
grain  to  supply  the  needs  of  its  own  population,  and  the  circulation  of  food 
from  country  to  country,  and  from  province  to  province,  was  restricted  and 
even  generally  prohibited.  After  the  middle  of  the  eighteenth  century  there 
were  indications  that  the  domestic  growth  of  wheat  in  England  was  falling 
below  the  consumption  of  the  people ;  but  this  unpleasant  fact  was  studiously 
concealed  by  the  enormously  expensive  corn  laws,  which  on  the  one  hand 
artificially  stimulated  agriculture  and  kept  poor  lands  in  cultivation,  and,  on 
the  other,  restricted  through  high  prices  the  consumption  of  bread — and  was 
not  openly  recognized  for  nearly  half  a  century  later.  Subsequently  the  other 
nations  of  Europe,  with  the  exception  of  Russia  and  Austria- Hungary,  have 
experienced  the  same  alteration  in  their  food-producing  capacity— in  part  due 
to  natural  influences,  and  in  part  to  artificial  factors — which  have  turned  the 
attention  of  the  people  away  from  the  cultivation  of  cereals  into  employments 
that  promised  to  be  more  profitable ;  and  they  have  found  it  cheaper  to  im- 
port food  than  to  grow  it  themselves.  So  that  there  are  now  no  countries  in 
Europe  save  the  two  above  mentioned  that  have  a  surplus  product  of  wheat 
available  for  export. 


46  RECENT  ECONOMIC  CHANGES. 

uniformity  of  prices  for  all  commodities  that  are  essential 
to  life,  and  to  put  an  end  forever  to  what,  less  than  half  a 
century  ago,  was  a  constant  feature  of  European  com- 
mercial experience,  commerce,  namely,  the  existence  of  lo- 
cal markets,  with  widely  divergent  prices  for  such  commod- 
ities. 

How  much  of  misery  and  starvation  a  locally  deficient 
harvest  entailed  under  the  old  system  upon  the  poorer 
classes,  through  the  absence  of  opportunity  of  supplying  the 
deficiency  through  importations  from  other  countries  and 
even  from  contiguous  districts,  is  shown  by  the  circumstance 
that  in  the  English  Parliamentary  debates  upon  the  corn 
laws,  about  the  year  1840,  it  was  estimated  upon  data  fur- 
nished by  Mr.  Tooke,  in  his  "  History  of  Prices,"  that  a 
deficiency  of  one  sixth  in  the  English  harvest  resulted  in  a 
rise  of  at  least  one  hundred  per  cent  in  the  price  of  grain  ; 
and  another  estimate  by  Davenant  and  King,  for  the  close 
of  the  seventeenth  century,  corroborates  this  apparently  ex- 
cessive statement.  The  estimate  of  these  latter  authorities 
was  as  follows  : 

For  a  deficit  There  will  be  a 

/     equal  to  —  rise  in  price  of  — 

<-       1-10  ..............................................  3-10 

*  '  2-10  ............................................  8-10 

3-10  .........................................  .....  16-10 

4-10  ..............................................  28-10 

5-10  ..............................................  45-10 

As  late  as  1817  the  difference  in  France  between  the 
highest  and  the  lowest  prices  of  grain  in  different  parts  of 
the  country  was  45  francs  per  hectolitre.  In  1847  the  aver- 
age difference  was  26  francs.  Since  1870  the  greatest  differ- 
ence at  any  time  has  not  been  in  excess  of  3-55  francs.  The 
following  table,  given  on  German  authority,  and  represent- 
ing the  price  (in  silver  gulden  per  hectolitre)  of  grain  for 
various  periods,  exhibits  a  like  progress  of  price  equalization 
between  nations  : 


K 


FUTURE  SUPPLY  OF  FOOD  COMMODITIES. 


PERIOD. 

England. 

France. 

Belgium. 

Prussia. 

1821-'30  

10-25 

7-35 

6-44 

5-65 

1831-'40  

9-60 

7-61 

7-31 

5-27 

1841-'50  

9-15 

7-89 

7-99 

6-41 

1851-'60  

9-40 

7-84 

9-65 

8-07 

1861-70     

8-80 

8-59 

9-24 

7-79 

For  grain  henceforth,  therefore,  the  railroad  and  the 
steamship  have  decided  that  there  shall  be  but  one  market 
— the  world ;  and  that  the  margin  for  speculation  in  this 
commodity,  so  essential  to  the  well-being  of  humanity,  shall 
be  restricted  to  very  narrow  limits ;  the  speculator  for  a  rise 
in  wheat  in  any  one  country  finding  himself  practically  in 
competition  with  all  wheat-producing  countries  the  moment 
he  undertakes  to  advance  prices ;  while  abnormal  values  in 
one  country  or  market,  or  excessive  reserves  at  one  center  or 
another,  are  certain  to  be  speedily  neutralized  and  controlled 
by  the  influence  of  all  countries  and  markets. 

The  movement  and  prices  of  wheat  for  the  year  1888 
furnish  a  most  remarkable  illustration  and  confirmation 
of  the  above  statements,  and  also  (as  Sir  James  Caird  has 
pointed  out)  "of  the  smoothness  (at  the  present  time)  of 
the  operations  of  trade  under  natural  conditions."  During 
the  eleven  months  of  1888,  ending  November  30th,  Great 
Britain  imported  a  little  more  than  sixty-seven  million  hun- 
dred-weight of  wheat  and  flour.  In  the  corresponding  eleven 
months  of  1887  the  foreign  supply  was  practically  the  same. 
There  was,  however,  a  very  great  change  in  the  sources  of 
supply.  Thus,  in  1887,  North  and  South  America  fur- 
nished forty-nine  million  hundred -weight  out  of  the  sixty- 
seven  million  hundred- weight  that  Great  Britain  required ; 
but  in  1888  the  harvests  of  America  were  comparatively 
meager,  and  supplied  Great  Britain  with  but  twenty-nine 
million  hundred-weight,  leaving  a  deficiency  of  twenty  mill- 
ions to  be  obtained  from  other  sources.  Eastern  Europe, 
and  especially  Russia,  which  were  favored  during  the  year 


48  RECENT  ECONOMIC  CHANGES. 

1888  with  splendid  weather  and  enormous  crops,  were  able 
to  promptly  make  good  the  missing  twenty  millions;  but 
the  market  changes  and  vicissitudes  of  trade  consequent 
on  such  an  extensive  transfer  of  the  British  supplies  of 
wheat  were  something  extraordinary.  Twenty  years  ago, 
had  Russia  in  any  one  year  harvested  a  surplus  of  wheat 
as  large  as  she  did  in  1888,  such  surplus,  through  an  inabili- 
ty to  cheaply  and  promptly  move  it  to  a  market,  would  have 
been  not  only  of  little  monetary  value  to  the  producer,  but 
would  probably  by  its  unsalable  presence  in  the  country  have 
considerably  lowered  the  market  price  of  so  much  of  the 
crop  as  was  required  for  home  consumption.  Under  exist- 
ing conditions,  however,  great  gain  accrued  to  the  Russian 
farmer  and  to  all  the  interests  and  nationalities  employed 
in  the  movements  of  his  product.  A  demand  for  shipping 
for  this  special  trade,  which  could  not  at  once  be  fully  sup- 
plied, also  occasioned  a  quick  advance  in  ocean  freights  in 
all  quarters  of  the  globe,  in  some  instances  to  the  extent  of 
one  hundred  per  cent,  and  concurrently  a  revival  of  the  in- 
dustry of  ship-building.  On  the  other  hand,  this  transfer 
of  the  wheat-supply  of  Great  Britain  represented  an  im- 
mense change  in  the  carrying-trade  and  business  of  the 
United  States  ;  while  the  American  speculator,  recognizing 
the  local  deficiency  of  the  wheat-crop  for  1888,  and  assum- 
ing that  the  American  supply  of  this  cereal  was  the  prime 
factor  in  determining  its  European  price,  largely  advanced 
prices  (the  average  price  of  No.  2  red  winter  wheat  in 
New  York  for  the  six  months  ending  December,  1888,  hav- 
ing been  $1.01  per  bushel,  as  compared  with  84.2  cents  for 
the  corresponding  period  of  1887).  But  in  this  they  were 
disappointed.  The  European  prices  did  not  materially  ad- 
vance ;  *  and  as  a  consequence,  while  the  American  public 
suffered,  "  the  British  consumer  was  enabled  to  eat  his  loaf 

*  English  wheat  sold  December  25,  1888,  at  £1 11*.  3d.  a  quarter,  against 
£1 11«.  2d.,  or  2%  cents  a  bushel  more  than  at  the  corresponding  date  in  1887, 
and  Is.  lOd.  less  than  in  December,  1886. 


INCREASE  IN  THE   WORLD'S  PRODUCT  OF  IRON.  49 

at  the  same  price  or  a  less  price  than  he  did  in  the  previous 
year."  And  if  the  consumer  was  not  a  student  of  statistics, 
he  would  not  have  been  in  the  least  conscious  that  it  was 
Eussian  rather  than  American  grain  from  which  his  bread 
was  manufactured.  In  short,  under  the  system  of  commer- 
cial freedom  which  Great  Britain  has  established,  all  the 
farming  interests  on  the  earth  grow  with  an  eye  to  the  pos- 
sible advent  of  the  British  people  as  customers ;  and  while 
the  latter,  on  their  part,  have  so  provided  themselves  with 
the  best  equipment  for  annihilating  time  and  distance,  that 
it  is  a  matter  of  indifference  to  them  whether  the  wheat- 
fields,  which  for  the  time  being  shall  have  their  preference, 
are  located  in  India,  Kussia,  Dakota,  South  America,  or 
Australia. 

The  world's  total  product  of  pig-iron  increased  slowly 
and  regularly  from  1870  to  1879,  at  the  rate  of  about  2£  per 
cent  per  annum,  but  after  1879  production  increased  enor- 
mously, until  in  1883  the  advance  among  all  nations  was 
82*2  per  cent  in  excess  of  the  make  of  1870,  the  increase  in 
the  product  of  the  United  Kingdom  being  43  per  cent,  and 
that  of  other  countries  139*1  per  cent  (Testimony  of  Sir 
Lowthian  Sell,  British  Commission,  1886).  Such  an  in- 
crease (after  1879),  justified  perhaps  at  the  moment,  was  far 
in  excess  of  the  ratio  of  increase  in  the  world's  population, 
and  for  a  term  of  years  greatly  disproportionate  to  any  in- 
crease in  the  world's  consumption,  and  finally  resulted,  as 
has  been  before  shown  (see  Chapter  I),  in  an  extreme  de- 
pression of  the  business,  and  a  remarkable  fall  of  prices. 

By  reason  largely  of  the  cheapening  of  iron  and  steel,  the 
cost  of  building  railroads  has  also  in  recent  years  been 
greatly  reduced.  In  1870-'71,  one  of  the  leading  railroads 
of  the  Northwestern  United  States  built  126  miles,  which, 
with  some  tunneling,  was  bonded  for  about  $40,000  per  mile. 
The  same  road  could  now  (1889)  be  constructed,  with  the 
payment  of  higher  wages  to  laborers  of  all  classes,  for  about 
$20,000  per  mile. 


50  RECENT  ECONOMIC  CHANGES. 

t 

The  power  to  excavate  earth,  or  to  excavate  and  blast 
rock,  is  from  five  to  ten  times  as  great  as  it  was  when  opera- 
tions for  the  construction  of  the  Suez  Canal  were  com- 
menced, in  1859-'60.  The  machinery  sent  to  the  Isthmus  of 
Panama,  for  the  excavation  of  the  canal  at  that  point,  was 
computed  by  engineers  as  capable  of  performing  the  labor 
of  half  a  million  of  men. 

The  displacement  of  muscular  labor  in  some  of  the 
cotton-mills  of  the  United  States,  within  the  last  ten  years, 
by  improved  machinery,  has  been  from  thirty-three  to  fifty 
per  cent,  and  the  average  work  of  one  operative,  working 
one  year,  in  the  best  mills  of  the  United  States,  will  now, 
according  to  Mr.  Atkinson,  supply  the  annual  wants  of  1,600 
fully  clothed  Chinese,  or  3,000  partially  clothed  East  Indians. 
In  1840  an  operative  in  the  cotton-mills  of  Ehode  Island, 
working  thirteen  to  fourteen  hours  a  day,  turned  off  9,600 
yards  of  standard  sheeting  in  a  year ;  in  1886  the  operative 
in  the  same  mill  made  about  30,000  yards,  working  ten  hours 
a  day.  In  1840  the  wages  were  $176  a  year;  in  1886  the 
wages  were  $285  a  year. 

The  United  States  census  returns  for  1880  report  a  very 
large  increase  in  the  amount  of  coal  and  copper  produced 
during  the  ten  previous  years  in  this  country,  with  a  very 
large  comparative  diminution  in  the  number  of  hands  em- 
ployed in  these  two  great  mining  industries ;  in  anthracite 
coal  the  increase  in  the  number  of  hands  employed  having 
been  33 '2  per  cent,  as  compared  with  an  increase  of  product 
of  82-7 ;  while  in  the  case  of  copper  the  ratios  were  15-8  and 
70 '8,  respectively.  For  such  results,  the  use  of  cheaper  and 
more  powerful  blasting  agents  (dynamite),  and  of  the  steam- 
drill,  furnish  an  explanation.  And,  in  the  way  of  further 
illustration,  it  may  be  stated  that  a  car-load  of  coal,  in  the 
principal  mining  districts  of  the  United  States,  can  now 
(1889)  be  mined,  hoisted,  screened,  cleaned,  and  loaded  in 
one  half  the  time  that  it  required  ten  years  previously. 

The  report  of  the  United  States  Commissioner  of  La- 


DISPLACEMENT  OF  LABOR  BY  MACHINERY.        51 

bor  for  1886  furnishes  the  following  additional  illustra- 
tions : 

"  In  the  manufacture  of  agricultural  implements,  specific 
evidence  is  submitted,  showing  that  six  hundred  men  now 
do  the  work  that,  fifteen  or  twenty  years  ago,  would  have 
required  2,145  men — a  displacement  of  1,545. 

"  The  manufacture  of  boots  and  shoes  offers  some  very 
wonderful  facts  in  this  connection.  In  one  large  and  long- 
established  manufactory  the  proprietors  testify  that  it  would 
require  five  hundred  persons,  working  by  hand  processes,  to 
make  as  many  women's  boots  and  shoes  as  a  hundred  per- 
sons now  make  with  the  aid  of  machinery — a  displacement 
of  eighty  per  cent. 

"  Another  firm,  engaged  in  the  manufacture  of  children's 
shoes,  states  that  the  introduction  of  new  machinery  within 
the  past  thirty  years  has  displaced  about  six  times  the  amount 
of  hand-labor  required,  and  that  the  cost  of  the  product  has 
been  reduced  one  half. 

"  On  another  grade  of  goods,  the  facts  collected  by  the 
agents  of  the  bureau  show  that  one  man  can  now  do  the 
work  which  twenty  years  ago  required  ten  men. 

"  In  the  manufacture  of  flour  there  has  been  a  displace- 
ment of  nearly  three  fourths  of  the  manual  labor  necessary 
to  produce  the  same  product.  In  the  manufacture  of  furni- 
ture, from  one  half  to  three  fourths  only  of  the  old  number 
of  persons  is  now  required.  In  the  manufacture  of  wall- 
paper, the  best  evidence  puts  the  displacement  in  the  pro- 
portion of  one  hundred  to  one.  In  the  manufacture  of 
metals  and  metallic  goods,  long-established  firms  testify  that 
machinery  has  decreased  manual  labor  33£  per  cent." 

In  1845  the  boot  and  shoe  makers  of  Massachusetts  made 
an  average  production,  under  the  then  existing  conditions 
of  manufacturing,  of  1*52  pairs  of  boots  for  each  working 
day.  In  1885  each  employe  in  the  State  made  on  an  aver- 
age 4'2j)airs  daily,  while  at  the  present  time  in  Lvnn  and 
Haverhill  the  daily  average  of  each  person  is  seven  pairs  per 


52  RECENT  ECONOMIC  CHANGES. 

day,  "  showing  an  increase  in  the  power  of  production  in 
forty  years  of  four  hundred  per  cent."* 

The  business  of  making  bottles  has  been  arduous  and 
unhealthy,  with  a  waste  of  about  thirty-three  per  cent  of 
the  "  melting  " ;  and,  although  this  waste  is  used  afterward, 
there  is  a  deterioration  in  its  quality  from  its  employment  a 
second  time.  For  many  years  this  specialty  of  industrial 
production  experienced  little  improvement;  but  it  finally 
commenced  in  the  substitution  in  1885  of  the  so-called 
Siemens  "  tank "  furnace,  in  place  of  the  old-fashioned 
"  coal "  furnace  for  the  melting  of  glass ;  one  of  the  for- 
mer supplanting  eight  of  the  latter;  requiring  four  men 
in  place  of  twenty-eight  to  feed  it,  producing  1,000,000 
square  feet  of  glass  per  month,  in  place  of  a  former  product 
of  115,000  feet,  and  working  continuously,  while  the  coal- 
furnaces  work  on  an  average  but  eighteen  days  per  month. 
Such  an  improvement  in  the  methods  of  manufacture,  as 
might  be  expected,  revolutionized  the  former  equilibrium, 
in  this  department  of  the  glass  industry  as  respects  the 
supply  and  demand  of  both  labor  and  product,  and  occa- 
sioned serious  riots  among  the  glass- workers  of  Charleroi,  in 
Belgium,  where  it  was  first  introduced.  The  process  of 
producing  the  bottle  by  "  blowing  "  was  not,  however,  af- 
fected by  the  above-noticed  improvement ;  but  within  the 
last  year  (1888)  a  practical  method  of  producing  bottles  is 
reported  as  having  been  invented  and  practically  applied  in 
England,  which  now  bids  fair  to  entirely  do  away  with  the 
process  of  "  blowing,"  with  an  accompanying  immense  in- 
crease of  daily  product  and  a  corresponding  reduction  in 
the  former  cost  of  labor. 

The  following  are  other  notable  results,  in  what  may  be 
termed  the  minor  industries : 

In  the  manufacture  of  jewelry,  one  skilled  workman, 


*  Address  by  Mr.  F.  W.  Norcroas,  November,  1888,  before  the  Boston 
Boot  and  Shoe  Club. 


CHANGES  IN  THE  MINOR  INDUSTRIES.  53 

paid  at  the  rate  of  two  and  a  half  to  three  dollars  per  day, 
and  working  according  to  ante-machine  methods  in  use  a 
few  years  ago,  could  make  up  three  dozen  pairs  of  sleeve- 
buttons  per  day.  Now,  one  boy,  paid  five  dollars  per  week, 
and  working  on  the  most  modern  machinery,  can  make  up 
nine  thousand  pairs  in  a  day.  In  gold  (or  imitation  gold) 
chain-making,  the  United  States  now  exports  the  cheapest 
grade  of  such  jewelry  produced  by  machinery  to  Germany, 
where  cottage  hand-labor,  in  the  same  vocation,  can  be  had 
for  a  pittance,  and  finds  a  ready  sale  for  them  as  against 
German  manufacturers. 

In  connection  with  a  new  (1889)  issue  of  notes  by  the 
Bank  of  France,  for  which  superiority  over  anything  of 
this  kind  heretofore  achieved  is  claimed,  and  which  engrav- 
ers and  chemists  believe  can  not  be  imitated  except  at  such 
an  expenditure  of  time  and  money  as  would  effectually  check 
all  effort  in  this  direction,  it  is  also  added  that  they  have 
been  produced  in  a  twentieth  part  of  the  time  spent  on 
those  which  are  now  being  withdrawn  from  circulation. 

Nothing  has  had  a  greater  influence  in  making  possible 
the  rapidity  with  which  certain  branches  of  retail  business 
are  now  conducted,  as  compared  with  ten  years  ago — more 
especially  the  sale  of  groceries — than  the  cheap  and  rapid 
production  of  paper  bags.  At  the  outset,  these  bags  were 
all  made  by  hand-labor ;  but  now  machinery  has  crowded 
out  the  hand- workers,  and  factories  are  in  existence  in  the 
United  States  which  produce  millions  of  paper  bags  per 
week,  and  not  unfrequently  fill  single  orders  for  three  mill- 
ions. Paper  sacks  for  the  transportation  of  flour  are  now 
(1889)  used  to  the  extent  of  about  one  hundred  millions  per 
annum ;  and  to  this  same  extent  have  superseded  the  use 
and  requirement  of  cotton  sacks  and  of  barrels.  With  ma- 
chinery have  also  come  many  improvements :  square  bags 
that  stand  up  of  themselves,  and  need  only  when  filled  from 
a  measure  to  have  the  top  edges  turned  over  to  make  the 
package  at  once  ready  for  delivery.  A  purchaser  can  now 


5±  RECENT  ECONOMIC  CHANGES. 

also  take  his  butter  or  lard  in  paper  trays  that  are  brine  and 
grease  proof ;  his  vinegar  in  paper  jars  that  are  warranted 
not  to  soak  for  one  hour  ;  a  bottle  of  wine  wrapped  in  a  cor- 
rugated case  that  would  not  break  if  he  dropped  it  on  the 
pavement,  and  his  oysters  in  paper  pails  that  will  hold  water 
overnight.  A  few  years  ago,  to  have  furnished  gratuitously 
these  packages,  would  have  been  deemed  extravagance  ;  but 
now  it  is  found  to  pay  as  a  matter  of  business. 

The  increase  in  the  producing  capacity  of  the  United 
States  in  respect  to  the  manufacture  of  paper  during  the 
years  from  1880  to  1887  inclusive,  was  also  very  striking, 
namely  :  in  number  of  mills,  twenty-five  per  cent ;  in  prod- 
uct, sixty-seven  per  cent ;  in  value  of  product,  twenty-seven 
per  cent.  The  reduction  in  the  prices  of  paper  in  the 
United  States  under  such  circumstances  has  been  very  great, 
and  since  1872,  for  all  qualities,  full  fifty  per  cent.* 

The  sobriquet  of  an  apothecary  was  formerly  that  of  a 
pill-maker ;  but  the  modern  apothecary  no  longer  makes 
pills,  except  upon  special  prescriptions ;  inasmuch  as  scores 
of  large  manufactories  now  produce  pills  by  machinery  ac- 
cording to  the  standard  or  other  formulas,  and  every  apoth- 
ecary keeps  and  sells  them,  because  they  are  cheaper,  better, 
and  more  attractive  than  any  that  he  can  make  himself. 

Certain  branches  of  occupation  formerly  of  considerable 
importance  under  the  influence  of  recent  improvements  seem 
to  be  passing  out  of  existence.  Previous  to  1872,  nearly  all 
the  calicoes  of  the  world  were  dyed  or  printed  with  a  col- 
oring principle  extracted  from  the  root  known  as  madder ; 

*  In  1880,  according  to  the  census,  there  were  692  paper-mills  in  the  United 
States,  producing  904,216,000  pounds  of  paper  annually,  valued  at  $55,109,914. 
In  1887  there  were  866  mills,  with  an  annual  product  of  1,514,469,000  pounds, 
valued  at  $70,000,000.  In  addition  to  this  annual  product,  paper  and  manu- 
factures of  paper  to  the  net  value  of  $866,726  were  imported.  A  calculation 
of  the  relative  amount  of  paper  consumed  per  capita  in  the  United  States  in  1887 
gives  a  total  of  $1.16  of  domestic  and  !4/i0  cent  of  foreign  manufacture.  The 
tariff  on  the  importation  of  paper  for  that  year  was  twenty-five  per  cent  ad 
valorem  on  "  writing,"  and  fifteen  per  cent  on  unsized  "printing"  papers. 


EXTINCTION  OF  CERTAIN  INDUSTRIES.  55 

the  cultivation  and  preparation  of  which  involved  the  use  of 
thousands  of  acres  of  land  in  Holland,  Belgium,  eastern 
France,  Italy,  and  the  Levant,  and  the  employment  of  many 
hundreds  of  men,  women,  and  children,  and  of  large  amounts 
of  capital ;  the  importation  of  madder  into  the  United  King- 
dom for  the  year  1872  having  been  28,731,600  pounds,  and 
into  the  United  States  for  the  same  year  7,786,000  pounds. 
To-day,  two  or  three  chemical  establishments  in  Germany 
and  England,  employing  but  few  men  and  a  comparatively 
small  capital,  manufacture  from  coal-tar,  at  a  greatly  reduced 
price,  the  same  coloring  principle;  and  the  former  great 
business  of  growing  and  preparing  madder — with  the  land, 
labor,  and  capital  involved — is  gradually  becoming  extinct ; 
the  importations  into  Great  Britain  for  the  year  1887  having 
declined  to  1,934,700  pounds,  and  into  the  United  States  to 
1,049,800  pounds. 

The  old-time  business  of  making  millstones — entitled  to 
rank  among  the  first  of  labor-saving  inventions  at  the  very 
dawn  of  civilization — is  rapidly  passing  into  oblivion,  be- 
cause millstones  are  no  longer  necessary  or  economical  for 
grinding  the  cereals.  The  steel  roller  produces  more  and 
better  flour  in  the  same  time  at  less  cost,  and  as  an  inevita- 
ble consequence  is  rapidly  taking  the  place  of  the  millstone 
in  all  countries  that  know  how  to  use  machinery.*  And,  as 
the  art  of  skillfully  grooving  the  surface  of  a  hard,  flinty 
rock  for  its  conversion  into  a  millstone  is  so  laborious,  so 
difficult  of  accomplishment  (four  or  five  years  of  service  be- 
ing required  in  France  from  an  apprentice  before  he  is 
allowed  to  touch  a  valuable  stone),  and  to  a  certain  extent 
so  dangerous  from  the  flying  particles  of  steel  and  stone, 
humanity,  apart  from  all  economic  considerations,  may  well 
rejoice  at  its  desuetude. 


*  Under  the  new  system,  seventy -four  per  cent  of  the  wheat  proes  into  flour 
and  twenty-six  per  cent  into  offal  or  bran,  against  thirty-three  and  a  third  per 
cent  of  bran  under  the  old  system. 


56  RECENT  ECONOMIC  CHANGES. 

With  the  substitution  of  steamers  for  sailing-vessels  upon 
the  broad  ocean,  the  former  extensive  business  of  sail-making, 
and  the  demand  upon  factories  for  heavy  cloth  as  material 
for  sails,  experienced  a  notable  depression,  which  in  later 
years  has  continued  and  increased,  because  commerce  along 
coast-lines  now  no  longer  moves  exclusively  by  sail,  but 
largely  in  barges  dragged  or  propelled  by  steam.  For  the 
four  years  next  previous  to  1886  the  demand  for  sails  in  the 
United  States  is  estimated  to  have  decreased  to  the  extent 
of  about  twenty-five  per  cent,  although  the  carrying-trade 
of  the  country  by  ocean,  coast,  and  inland  waters,  has,  dur- 
ing the  same  time,  increased  very  considerably. 

Cotton-seed  oil — an  article  a  few  years  ago  absolutely 
unknown  in  commerce,  and  prepared  from  what  was  for- 
merly regarded  almost  in  the  light  of  a  waste  product,  is 
now  manufactured  in  the  United  States,  and  has  come  into 
such  extensive  use  as  a  substitute  for  lard,  olive,  and  other 
oils,  for  culinary  and  manufacturing  purposes,  that  its  pres- 
ent annual  production  and  sale  are  estimated  to  be  equiva- 
lent to  about  70,000,000  pounds  of  lard ;  and  has  contributed 
not  only  to  notably  reduce  the  price  and  the  place  of  that 
important  hog-product  in  the  world's  markets,  but  also  to 
impair  the  production  and  depress  the  price  of  almost  all 
other  vegetable  oils — the  product  of  the  industries  of  other 
countries. 

Another  matter  of  great  industrial  importance  which  a 
very  few  years  ago  also  was  practically  unknown  is  the  fuel 
use  in  the  United  States  of  natural  gas,  which,  during  the 
year  1887,  is  estimated  by  the  United  States  Geological  Sur- 
vey to  have  displaced  the  use  of  9,867,000  tons  of  coal,  hav- 
ing a  value  of  $15,838,500,  as  compared  with  a  displacement 
of  6,453,000  tons  in  1886  and  3,131,000  tons  in  1885.  The 
total  mileage  of  pipes  for  the  conveyance  of  natural  gas  in 
1887  was  estimated  at  about  2,500  miles.  In  November  of 
the  same  year  the  whole  number  of  rolling-mills  and  steel- 
works in  the  United  States  completed  or  in  the  course  of 


FUEL  USE  OP  NATURAL  GAS.  57 

erection  was  four  hundred  and  forty-five,  of  which  nearly 
one  fourth  used  natural  gas  as  fuel. 

One  prime  factor  in  the  use  of  this  new  agency  is  the 
small  expense  attending  its  application.  Thus  in  one  of  the 
large  steel-works  of  Pittsburg,  Pa.,  three  men  do  all  the 
service  required  in  the  boiler-room,  each  one  being  on  duty 
for  eight  hours.  When  coal  was  used  as  fuel,  the  same  firm 
required  the  services  of  ninety  men  in  the  boiler-room  for 
every  twenty-four  hours.  Another  saving  is  found  in  a  dimin- 
ished degree  of  deterioration  in  the  boilers  when  the  gas  is 
carefully  used.  For  household  use  the  advantage  of  natural 
gas  is  equally  evident,  a  single  turn  of  a  cock  being  substi- 
tuted in  place  of  the  former  necessarily  dirty  work  of  kind- 
ling a  fire  when  coal  was  employed. 

"  Natural  gas  is,  however,  not  now  supplied  at  as  cheap  rates  as  a 
few  years  ago.  It  has,  too,  strange  as  it  may  appear,  a  rival  as  a  cheap 
and  cleanly  fuel  in  water-oil  gas  produced  from  petroleum,  which  is 
steadily  growing  in  popularity  among  American  iron  and  steel  and  a 
few  other  manufacturers.  It  is  claimed  that  this  fuel  is  cheaper  than 
coal,  or  than  gas  made  from  it,  and  that  it  possesses  all  the  desirable 
qualities  of  natural  gas,  and  is  far  safer.  This  new  fuel  possesses  also 
the  advantage  that  it  can  be  produced  and  used  where  natural  gas  can 
not  be  obtained,  and  even  where  coal  may  be  too  expensive  for  use." — 
Report  of  MR.  JAMES  M.  SWANK,  1888. 

But  in  respect  to  no  other  one  article  has  change  in  the 
conditions  of  production  and  distribution  been  productive 
of  such  momentous  consequences  as  in  the  case  of  wheat. 
On  the  great  wheat-fields  of  the  State  of  Dakota,  where 
machinery  is  applied'  to  agriculture  to  such  an  extent  that 
the  requirement  for  manual  labor  has  been  reduced  to  a 
minimum,  the  annual  product  of  one  man's  labor,  working 
to  the  best  advantage,  is  understood  to  be  now  equivalent 
to  the  production  of  J),500_bu8hels  of  wheat.  In  the  great 
mills  of  Minnesota,  the  labor  of  another  one  man  for  a  year, 
under  similar  conditions  as  regards  machinery,  is  in  like 
manner  equivalent  to  the  conversion  of  this  unit  of  5,500 


58  RECENT  ECONOMIC  CHANGES. 

bushels  of  wheat  into  a  thousand  barrels  of  flour,  leaving 
500  bushels  for  seed-purposes ;  and,  although  the  conditions 
for  analysis  of  the  next  step  in  the  way  of  results  are  more 
difficult,  it  is  reasonably  certain  that  the  year's  labor  of  one 
and  a  half  men  more — or,  at  the  most,  two  men — employed 
in  railroad  transportation,  is  equivalent  to  putting  this  thou- 
sand barrels  of  flour  on  a  dock  in  New  York  ready  for  ex- 
portation, where  the  addition  of  a  fraction  of  a  cent  a  pound 
to  the  price  will  further  transport  and  deliver  it  at  almost 
any  port  of  Europe.* 

Here,  then,  we  have  the  labor  of  three  men  for  one  year, 
working  with  machinery,  resulting  in  the  producing  all  the 
flour  that  a  thousand  other  men  ordinarily  eat  in  a  year, 
allowing  one  barrel  of  flour  for  the  average  consumption  of 
each  adult.  Before  such  a  result  the  question  of  wages  paid 
in  the  different  branches  of  flour  production  and  trans- 
portation becomes  an  insignificant  factor  in  determining  a 
market ;  and,  accordingly,  American  flour  grown  in  Dakota, 
and  ground  in  Minneapolis,  from  a  thousand  to  fifteen  hun- 
dred miles  from  the  nearest  seaboard,  and  under  the  au- 
spices of  men  paid  from  a  dollar  and  a  half  to  two  dollars 
and  a  half  per  day  for  their  labor,  is  sold  in  European 
markets  at  rates  which  are  determinative  of  the  prices  which 
Eussian  peasants,  Egyptian  "  fellahs,"  and  Indian  "  ryots," 
can  obtain  in  the  same  markets  for  similar  grain  grown  by 


*  "  "When  the  wheat  reaches  New  York  city,  and  comes  into  the  possession 
of  a  great  baker,  who  has  established  the  manufacture  of  bread  on  a  large 
scale,  and  who  sells  the  best  of  bread  to  the  working-people  of  New  York  at 
the  lowest  possible  price,  we  find  that  one  thousand  barrels  of  flour  can  be 
converted  into  bread  and  sold  over  the  counter  by  the  work  of  three  persons 
for  one  year.  Let  us  add  to  the  six  and  a  half  men  already  named  the  work 
of  another  man  six  months,  or  a  half  a  man  one  year,  to  keep  the  machinery 
in  repair,  and  our  modern  miracle  is,  that  seven  men  suffice  to  give  one  thou- 
sand persons  all  the  bread  they  customarily  consume  in  one  year.  If  to  these 
we  add  three  for  the  work  of  providing  fuel  and  other  materials  to  the  railroad 
/  and  the  baker,  our  final  result  is  that  tep  men  working  one  year  serve  bread 
\  to  one  thousand." — "Distribution  of  Products"  EDWARD  ATKINSON. 


THE  MANUFACTURE  OF/PINS. 


them  on  equally  good  soil,  and  with  from  fifteen  to  twenty 
cents  per  day  wages  for  their  labor. 

On  the  wheat-farms  of  the  Northwestern  United  States 
it  was  claimed  in  1887  that,  with  wages  at  twenty-five  dol- 
lars per  month  and  board  for  permanent  employes,  wheat 
could  be  produced  for  forty  cents  per_  bushel ;  while  in 
Ehenish  Prussia,  with  wages  at  "six  dollars  per  month,  the 
cost  of  production  was  reported  to  be  eigjity  cents  per 
bushel. 

How  much  more  significantly  differences  manifest  them- 
selves in  the  results  of  mechanical  production,  when  long 
periods  of  time  are  taken  for  comparison,  is  illustrated 
by  an  exhibit  in  parallel  columns  of  a  statement  made  by 
Adam  Smith  in  his  "  Wealth  of  Nations"  (first  published 
in  1776,  Vol.  I,  Chapter  1),  respecting  The  manufacture  of 
pins,  and  which  then  seemed  to  him  as  something,  extraor- 
dinary, and  a  similar  statement  of  the  present  condition  of 
this  business,  as  set  forth  in  an  official  report  to  the  United 
States  Department  of  State  in  the  year  1888 : 


/  fo: 


"  To  take  an  example,  there- 
fore, from  a  very  trifling  manu- 
facture, but  one  in  which  the  di- 
vision of  labor  has  been  very  often 
taken  notice  of — the  trade  of  the 
pin-maker.  A  workman  not  edu- 
cated to  this  business  (which  the 
division  of  labor  has  rendered  a 
distinct  trade),  nor  acquainted 
with  the  use  of  the  machinery  em- 
ployed in  it  (to  the  invention  of 
which  the  same  division  of  labor 
has  probably  given  occasion),  could 
scarce,  perhaps,  with  his  utmost 
industry  make  one  pin  a  day,  and 
certainly  could  not  make  twenty. 
But  in  the  way  in  which  this  busi- 
ness is  now  carried  on,  not  only 
the  whole  work  is  a  peculiar  trade, 


"  The  relative  indifference  of 
high  day  wages  when  brought  side 
by  side  with  such  astonishing  re- 
sults is  more  apparent  yet  when 
we  deal  with  industries  where  au- 
tomatic machinery  is  employed  al- 
most exclusively  —  screw-making, 
nail-making,  pin-making,  etc.  In 
the  latter  industry  the  coil  of 
brass  wire  is  put  in  its  proper 
place,  the  end  fastened,  and  the 
almost  human  piece  of  mechanism, 
with  its  iron  fingers,  does  the  rest 
of  the  work.  One  machine  makes 
180  pins  a  minute,  cutting  the 
wire,  flattening  the  heads,  sharp- 
ening the  points,  and  dropping 
the  pin  in  its  proper  place.  One 
hundred  and  eight  thousand  pins 


60 


RECENT  ECONOMIC  CHANGES. 


but  it  is  divided  into  a  number  of 
branches,  of  which  the  greater 
part  are  likewise  peculiar  trades. 
One  man  draws  out  the  wire,  an- 
other straightens  it,  a  third  cuts 
it,  a  fourth  points  it,  a  fifth  grinds 
it  at  the  top  for  receiving  the 
head.  To  make  the  head  requires 
two  or  three  distinct  operations ; 
to  put  it  on  is  a  peculiar  business, 
to  whiten  the  pin  is  another.  It 
is  even  a  trade  by  itself  to  put 
them  into  the  paper,  and  the  im- 
portant business  of  making  a  pin 
is,  in  this  manner,  divided  into 
about  eighteen  distinct  operations, 
which,  in  some  manufactories,  are 
all  performed  by  distinct  hands, 
though  in  others  the  same  man 
will  sometimes  perform  two  or 
three  of  them.  I  have  seen  a  small 
manufactory  of  this  kind  where 
ten  men  only  were  employed,  and 
where  some  of  them  consequently 
performed  two  or  three  distinct 
operations.  But  though  they  were 
very  poor,  and  therefore  but  in- 
differently accommodated  with  the 
necessary  machinery,  they  could, 
when  they  exerted  themselves, 
make  among  them  about  twelve 
pounds  of  pins  in  a  day.  There 
are  in  a  pound  upward  of  four 
thousand  pins  of  a  middling  size. 
Those  ten  persons,  therefore,  could 
make  among  them  upward  of 
forty-eight  thousand  pins  in  a 
day."  —  ADAM  SMITH,  Wealth  of 
Nations,  A.  D.  1776. 


In  other  words,  in  the  time  of  Adam  Smith  it  was  re- 
garded as  a  wonderful  achievement  for  ten  men  to  make 


a  day  is  the  output  of  one  ma- 
chine. A  factory  visited  by  me 
employed  seventy  machines.  These 
had  a  combined  output  per  day  of 
7,500,000  pins,  or  300  pins  to  a 
paper,  25,000  papers  of  pins ;  al- 
lowing for  stoppages  and  neces- 
sary time  for  repairs,  say  20,000 
papers.  These  machines  are  tended 
by  three  men.  A  machinist  with 
a  boy-helper  attends  to  the  repair- 
ing. It  will  not  materially  influ- 
ence the  price  of  pins  whether  the 
combined  earnings  of  these  five 
men  be  $7.50  or  $10  per  diem. 
The  difference  would  amount  to 
one  eighth  of  a  cent  on  a  paper  of 
pins.  The  likelihood  is  that  when 
cheaper  help  is  employed  a  greater 
number  of  hands  would  be  em- 
ployed for  the  same  work  and  the 
same  output." — Influences  bearing 
on  Production.  Report  on  Tech- 
nical Education  to  the  United 
States  State  Department,  by  U.  S. 
Consul  Schoenhoff,  1888. 


EPOCH  OF  EFFICIENT  MACHINERY.  61 

48,000  pins  in  a  day,  but  now  three  men  can  make  7,500,000 
pins  of  a  vastly  superior  character  in  the  same  time. 

A  great  number  of  other  similar  and  equally  remarkable 
experiences,  derived  from  almost  every  department  of  indus- 
try except  the  handicrafts,  might  be  presented ;  but  it  would 
seem  that  enough  evidence  has  been  offered  to  prove  abun- 
dantly, that  in  the  increased  control  which  mankind  has 
acquired  over  the  forces  of  Nature,  and  in  the  increased 
utilization  of  such  control — mainly  through  machinery — for 
the  work  of  production  and  distribution,  is  to  be  found  a 
cause  sufficient  to  account  for  most  if  not  all  the  economic 
disturbance  which,  since  the  year  1873,  has  been  certainly 
universal  in  its  influence  over  the  domain  of  civilization ; 
abnormal  to  the  extent  of  justifying  the  claim  of  having 
been  unprecedented  in  character,  and  which  bids  fair  in  a 
greater  or  less  degree  to  indefinitely  continue.  Other  causes 
may  and  doubtless  have  contributed  to  such  a  condition  of 
affairs,  but  in  this  one  cause  alone  (if  the  influences  referred 
to  can  be  properly  considered  as  a  unity)  it  would  seem  there 
has  been  sufficient  of  potentiality  to  account  not  only  for  all 
the  economic  phenomena  that  are  under  discussion,  but  to 
occasion  a  feeling  of  wonder  that  the  world  has  accommo- 
dated itself  so  readily  to  the  extent  that  it  has  to  its  new 
conditions,  and  that  the  disturbances  have  not  been  very 
much  greater  and  more  disastrous. 

A  question  which  these  conclusions  will  naturally  sug- 
gest may  at  once  be  anticipated.  Have  not  these  same  in- 
fluences, it  may  be  asked,  been  exerted  during  the  whole  of 
the  present  century,  and  in  fact  ever  since  the  inception  of 
civilization ;  and  are  there  any  reasons  for  supposing  that 
this  influence  has  been  different  during  recent  years  in  kind 
and  degree  from  what  has  been  heretofore  experienced? 
The  answer  is,  Certainly  in  kind,  but  not  in  degree.  The 
world  has  never  seen  anything  comparable  to  the  results  of 
the  recent  system  of  transportation  by  land  and  water,  never 

experienced  in  so  short  a  time  such  an  expansion  of  all  that 
4 


62  RECENT  ECONOMIC  CHANGES. 

pertains  to  what  is  called  business,  and  has  never  before,  as 
was  premised  at  the  outset  of  this  argument,  been  able  to 
accomplish  so  much  in  the  way  of  production  with  a  given 
amount  of  labor  in  a  given  time.  Thus  it  is  claimed  in  re- 
spect to  the  German  Empire,  where  the  statistics  of  pro- 
duction and  distribution  have  doubtless  been  more  carefully 
studied  by  experts  than  elsewhere,  that  during  the  period 
from  1872  to  1885  there  was  an  expansion  in  the  railroad 
traffic  of  this  empire  of  ninety  per  cent ;  in  marine  tonnage, 
of  about  a  hundred  and  twenty  per  cent ;  in  the  general 
mercantile  or  commercial  movement,  of  sixty -seven  per 
cent ;  in  postal  matter  carried,  of  a  hundred  and  eight  per 
cent ;  in  telegraphic  dispatches,  of  sixty-one  per  cent ;  and 
in  bank  discounts,  of  two  hundred  and  forty  per  cent.  Dur- 
ing the  same  period  population  increased  about  eleven  and 
a  half  per  cent,  and  from  such  data  there  has  been  a  general 
deduction  that,  "  if  one  unit  of  trade  was  the  ratio  to  one 
unit  of  population  in  Germany  in  1872,  the  proportion  in 
1885  was  more  than  ten  units  of  trade  to  one  of  popula- 
tion." But,  be  this  as  it  may,  it  can  not  be  doubted  that 
whatever  has  been  the  industrial  expansion  of  Germany  in 
recent  years,  it  has  been  at  least  equaled  by  England,  ap- 
proximated to  by  France,  and  certainly  surpassed  by  the 
United  States.* 

There  is  very  much  that  contributes  to  the  support  of 
the  idea  which  has  been  suggested  by  M.  Layeleye,  editor  of 
the  "  Moniteur  des  Interets  Materiels,"  at  Brussels,  that  the 
industrial  activity  of  the  greater  part  of  this  century  has 
been  devoted  to  fully  equipping  the  civilized  countries  of 

*  A  statistical  exhibit  of  the  growth  of  British  industrial  interests  during 
the  reign  of  Queen  Victoria  (fifty  years),  published  in  1887,  in  connection  with 
the  "Queen's  Jubilee,"  showed  that  the  production  of  coal  has  increased  in 
Great  Britain  during  this  period  from  36,000,000  tons  to  147,000,000  tons  per 
annum  ;  and  that  manufactures  had  increased  in  about  an  equal  ratio  with  the 
output  of  coal — that  is  to  say,  had  about  quadrupled  (four  hundred  per  cent). 
Meanwhile,  the  population  of  the  United  Kingdom  increased  only  thirty-three 
per  cent. 


At*- 

0 

MODERN  RAPIDITY  OF  INDUSTRIAL  DEVELOPMENT.  63 

the  world  with  economic  tools,  and  that  the  work  of  the 
future,  in  this  same  sphere,  must  be  necessarily  that  of  re- 
pair and  replacements  rather  than  of  new  constructions. 
But  a  more  important  inference  from  this  same  idea,  and 
one  that  fully  harmonizes  with  and  rationally  explains  the 
phenomena  of  the  existing  situation  is,  that  the  equipment 
having  at  last  been  made  ready,  the  work  of  using  it  for 
production  has  in  turn  begun,  and  has  been  prosecuted  so 
efficiently,  that  the  world  has  within  recent  years,  and  for 
the  first  time,  become  saturated,  as  it  were,  under  existing 
conditions  for  use  and  consumption,  with  the  results  of  these 
modern  improvements. 

Again,  although  the  great  natural  labor-saving  agencies 
had  been  recognized  and  brought  into  use  many  years  prior 
to  1870,  their  powers  were  long  kept,  as  it  were,  in  abey- 
ance ;  because  it  required  time  for  the  instrumentalities  or 
methods,  by  which  the  world's  work  of  production  and  dis- 
tribution was  carried  on,  to  adjust  themselves  to  jiew  con- 
ditions; and  until  this  was  accomplished,  an  almost  infinite 
number  and  variety  of  inventions  which  genius  had  pro- 
duced for  facilitating  and  accelerating  industrial  evolution 
were  matters  of  promise  rather  than  of  consummation.  But, 
with  the  extension  of  popular  education  and  the  rapid  diffu- 
sion of  intelligence,  all  new  achievements  in  science  and  art 
have  been  brought  in  recent  years  so  much  more  rapidly 
"  within  the  sphere  of  the  every-day  activity  of  the  people  " 
— as  the  noted  German -inventor,  Dr.  Werner  Siemens,  has 
expressed  it — "  that  stages  of  development,  which  ages  ago 
required  centuries  for  their  consummation,  and  which  at  the 
beginning  of  our  times  required  decades,  now  complete  them- 
selves in  years,  and  not  unfrequently  present  themselves  at 
once  in  a  state  of  completeness." 

It  should  also  be  remembered  that  fifty  years  ago  the 
"  sciences  "  were  little  more  than  a  mass  of  ill-digested  facts 
or  "  unassorted  laws,"  and  that  in  the  departments  of  physics 
and  chemistry  comparatively  little  had  been  accomplished 


64  RECENT  ECONOMIC  CHANGES. 

in  the  way  of  industrial  application  and  direction.  To  say, 
indeed,  what  the  world  did  not  have  half  a  century  ago  is 
almost  equivalent  to  enumerating  all  those  things  which  in 
their  understanding,  possession,  and  common  use  the  world 
now  regards  as  constituting  the  dividing  lines  between  civ- 
ilization and  barbarism.  Thus,  fifty  years  ago  the  railroad 
and  the  locomotive  were  practically  unknown.  The  ocean 
steam  marine  dates  from  1838,  when  the  Sirius  and  Great 
Western — the  two  pioneer  vessels — crossed  the  Atlantic  to 
New  York.  Electricity  had  then  hardly  got  "  beyond  the 
stage  of  an  elegant  amusement,"  and  the  telegraph  was  not 
really  brought  into  practical  use  before  1844.  The  follow- 
ing is  a  further  partial  list  of  the  inventions,  discoveries,  and 
applications  whose  initial  point  of  "  being  "  is  not  only  more 
recent  than  the  half-century,  but  whose  fuller  or  larger  de- 
velopment in  a  majority  of  instances  is  also  referable  to  a 
much  more  recent  date :  The  mechanical  reapers,  mowing 
and  seeding  machines,  the  steam-plow  and  most  other  emi- 
nently labor-saving  agricultural  devices ;  the  Bessemer  pro- 
cess and  the  steel  rail  (1857) ;  the  submarine  and  trans- 
oceanic telegraph  cables  (1866) ;  photography  and  all  its 
adjuncts ;  electro-plating  and  the  electrotype ;  the  steam- 
hammer,  repeating  and  breech-loading  fire-arms,  and  rifled 
and  steel  cannon ;  gun-cctton  and  dynamite ;  -the  industrial 
use  of  India-rubber  and  gutta-percha ;  the  steam-excavator 
and  steam-drill ;  the  sewing-machine ;  the  practical  use  of 
the  electric  light ;  the  application  of  dynamic  electricity  as 
a  motor  for  machinery;  the  steam  fire-engine;  the  tele- 
phone, microphone,  spectroscope,  and  the  process  of  spectral 
analysis ;  the  polariscope ;  the  compound  steam-engine ;  the 
centrifugal  process  of  refining  sugar;  the  rotary  printing- 
press  ;  hydraulic  lifts,  cranes,  and  elevators ;  the  "  regener- 
ative "  furnace,  iron  and  steel  ships,  pressed  glass,  wire  rope, 
petroleum  and  its  derivatives,  and  analine  dyes ;  the  in- 
dustrial use  of  the  metal  nickel,  cotton-seed  oil,  artificial 
butter,  stearine-candles,  natural  gas,  cheap  postage,  and  the 


DISPLACEMENT  OF  THE  STEAM-ENGINE.  65 

postage-stamp.  Electricity,  which  a  very  few  years  ago  was 
regarded  as  something  wholly  immaterial,  has  now  acquired 
a  sufficiently  objective  existence  to  admit  of  being  manu- 
factured and  sold  the  same  as  pig-iron  or  leather.  In  short, 
to  one  whose  present  memory  and  life- experiences  do  not 
extend  over  a  period  of  time  more  extensive  than  what  is 
represented  by  a  generation,  the  recital  of  the  economic  ex- 
periences and  industrial  conditions  of  the  generation  next 
preceding  is  very  much  akin  to  a  recurrence  to  ancient 
history. 

It  will  be  interesting  also  here  to  call  attention  to  some 
of  the  agencies  productive  of  further  extensive  economic 
changes  which  are  now  in  the  process  of  development,  or 
which  are  confidently  predicted  as  certain  to  occur  in  the 
not  very  remote  future. 

Thus,  notwithstanding  the  immense  service  which  the 
steam-engine  has  rendered  to  humanity,  and  its  present  con- 
tinuing necessity  as  a  prime  factor  in  all  civilization,  it  is 
at  the  same  time  certain  that  as  a  machine  it  is  most  imper- 
fect, inasmuch  as  the  very  best  steam-engines  only  utilize 
about  one  sixth  of  the  power  (work)  which  resides  in  the 
fuel  which  is  consumed  in  the  generation  of  steam.  The 
entire  displacement  of  the  steam-engine  as  it  now  exists  is, 
therefore,  not  only  essential  to  further  great  material  prog- 
ress, but  is  confidently  expected  to  happen  at  no  very  dis- 
tant period  by  those  eminently  qualified  to  express  an  opin- 
ion on  this  subject.  Thus,  at  the  meeting  of  the  British 
Association  for  the  Advancement  of  Science  in  1888,  the 
president,  Sir  Frederick  Bramwell,  after  expressing  his 
belief  that  the  days  of  the  steam-engine  for  small  powers 
were  already  numbered,  further  predicted  that  those  who 
should  attend  the  centenary  of  the  Association  in  1931 — 

"  Would  see  the  present  steam-engines  in  museums,  treated  as 
things  to  be  respected  and  of  antiquarian  interest,  by  the  engineers  of 
those  days,  such  as  are  the  open-topped  steam  cylinders  of  Newcomen 


66  RECENT  ECONOMIC  CHANGES. 

and  of  Smeaton  to  ourselves,  and  that  the  heat-engine  of  the  future 
will  probably  be  one  independent  of  the  vapor  of  water."  Indeed,  "  the 
working  of  heat-engines,  without  the  intervention  of  the  vapor  of  water 
by  the  combusion  of  the  gases  arising  from  coal,  or  from  coal  and  from 
water,"  he  continued,  "  is  now  not  merely  an  established  fact,  but  a 
recognized  and  undoubted  commercially  economical  means  of  obtain- 
ing motive  power.  Such  engines,  developing  from  one  to  forty  horse- 
power, and  worked  by  ordinary  gas  supplied  by  gas-mains,  are  in  most 
extensive  use  in  printing-works,  hotels,  clubs,  theatres,  and  even  in 
large  private  houses,  for  the  working  of  dynamos  to  supply  electric 
light.  But,  looking  at  the  wonderful  petroleum  industry,  and  at  the 
multifarious  products  which  are  obtained  from  the  crude  material,  is 
it  too  much  to  say  that  there  is  a  future  for  motor-engines  worked  by 
the  vapor  of  some  of  the  more  highly  volatile  of  these  products — true 
vapor — not  a  gas,  but  a  condensable  body  capable  of  being  worked 
over  and  over  again  ?  Numbers  of  such  engines,  some  of  as  much  as 
four  horse-power,  are  now  running,  and  are  apparently  giving  good  re- 
sults— certainly  excellent  results  as  regards  the  compactness  and  light- 
ness of  the  machinery." 

In  connection  with  this  subject,  the  rapidity  with  which 
electric  motors  for  stationary  power  are  supplanting  the 
steam-engine  should  not  be  overlooked.  Thus,  in  the 
United  States  alone  it  is  estimated  that  between  seven 
thousand  and  eight  thousand  such  motors  for  driving  ma- 
chinery were  in  operation  at  the  close  of  the  year  1888. 
Notwithstanding,  furthermore,  the  present  wide  utilization 
of  telegraphy  and  the  telephone  as  a  means  of  annihilating 
time  and7  space,  there  is  much  to  justify  the  opinion  that 
both  of  these  instrumentalities  are  really  in  their  infancy, 
and  that  it  would  not  be  surprising  if,  before  the  commence- 
ment of  the  twentieth  century,  the  present  comparatively 
cumbersome  and  slow  methods  of  postal  communication 
should  be  superseded  to  almost  as  great  an  extent  as  the 
locomotive  has  supplanted  the  stage-coach  or  the  ocean- 
steamer  the  sailing-ship,  and  that  ultimately  the  business 
and  social  correspondence  of  the  people  of  every  highly  civil- 
ized country  will  be  mainly  transacted  upon  an  electric 
basis.  How  extensive  the  movement  is  in  this  direction 


CONTINUANCE  OF  MATERIAL  EVOLUTION.    67 

may  be  illustrated  by  a  statement  made  in  the  annual  re- 
port (1888)  of  the  Western  Union  (United  States)  Tele- 
graph Company  (and  which  popular  opinion  indorses),  that 
"  there  is  no  business  in  the  country  that  has  developed  and 
is  developing  such  rapid  growth  and  increase  as  the  service 
of  the  telegraph."  And  in  support  of  this  assertion,  and  as 
showing  how  the  existing  system  approximates  to  universal- 
ity, the  same  report  states  that  of  this  company's  toll  rev- 
enue for  the  years  1887-'88  about  ninety-two  per  cent  was 
derived  from  commercial,  family,  and  social  messages,  and 
only  eight  per  cent  from  the  press.  But  the  measure  of  this 
comparatively  small  proportion  of  eight  per  cent  is  shown 
by  the  fact  that  the  mere  "  news  "  service  delivered  from  its 
wires  for  the  year  in  question — counting  one  delivery  at 
each  place  served — comprised  740,000,000  words ;  and  if  to 
this  aggregate  what  is  known  as  "special  reports"  are 
added,  the  total  amounted  to  1,467,000,000  words  trans- 
mitted for  publication  alone. 

Speaking  generally,  moreover,  there  is  no  reason  for 
doubting  that  the  wonderful  material  evolution  of  recent 
years  will  be  continued,  unless  man  himself  interposes  obsta- 
cles, although  the  goal  to  which  this  evolution  tends  can 
not  be  predicted  or  possibly  imagined.  "  The  deeper  the 
insight  we  obtain  into  the  mysterious  workings  of  Nature's 
forces,"  says  Werner  Siemens,  an  authority  most  competent 
to  express  an  opinion,  "  the  more  we  are  convinced  that  we 
are  still  standing  only  in  the  vestibule  of  science,  that  an 
immeasurable  field  still  lies  before  us,  and  that  it  is  very 
questionable  whether  mankind  will  ever  arrive  at  a  full 
knowledge  of  nature." 

One  influence  which  has  been  more  potent  in  recent 
years  than  ever  before  in  stimulating  the  invention  and  use 
of  labor-saving  machinery,  and  which  should  not  be  over- 
looked in  reasoning  upon  this  subject,  has  been  undoubtedly 
the  increasing  frequency  of  strikes  arid  industrial  revolts  on 


68  RECENT  ECONOMIC  CHANGES. 

the  part  of  the  large  proportion  of  the  population  of  all  civ- 
ilized countries  engaged  in  the  so-called  mechanical  occupa- 
tions ;  which  actions  in  turn  on  the  part  of  such  classes  have 
been  certainly  largely  prompted  by  the  changes  in  the  con- 
ditions of  production  resulting  from  prior  labor-saving  in- 
ventions and  discoveries.  As  the  London  "  Engineer  "  has 
already  pointed  out  (see  page  4,  Chapter  I),  the  remedy 
that  at  once  suggests  itself  to  every  employer  of  labor  on 
the  occasion  of  such  trouble  with  his  employes  is,  "  to  use  a 
tool  wherever  it  is  possible  instead  of  a  man."  And  one 
significant  illustration  of  the  quickness  with  which  employ- 
ers carry  out  this  suggestion  is  afforded  by  the  well-authen- 
ticated fact  that  the  strike  among  the  boot  and  shoe  factories 
of  one  county  in  the  State  of  Massachusetts,  in  the  year 
1885,  resulted  in  increasing  the  capacity  for  production  by 
the  same  factories  during  the  succeeding  year  of  a  fully 
equal  product,  with  reduction  of  at  least  fifteen  hundred 
operatives  ;  one  machine  improvement  for  effecting  an  oper- 
ation called  "  lasting  "  having  been  introduced  which  is  ca- 
pable of  doing  the  former  work  of  from  two  hundred  to  two 
hundred  and  fifty  men,  with  a  force  not  exceeding  fifty  men. 
Another  fact  confirmatory  of  the  above  conclusion  is, 
that  all  investigators  substantially  agree  that  the  depression 
of  industry  in  recent  years  has  been  experienced  with  the 
greatest  severity  in  those  countries  where  machinery  has 
been  most  extensively  adopted,  and  least  in  those  countries 
and  in  those  occupations  where  hand-labor  and  hand-products 
have  not  been  materially  interfered  with  or  supplanted. 
There  is  no  evidence  that  the  mass  of  the  people  of  any 
country  removed  from  the  great  lines  of  the  world's  com- 
merce, as  in  China,  India,  Turkey,  Mexico,  and  the  states 
of  Northern  Africa,  experienced  any  disturbance  prior  to 
1883,  except  from  Variations  in  crops,  or  civil  commotions ; 
and  if  the .  experience  of  a  few  of  such  countries  has  been 
different  since  1883,  the  cause  may  undoubtedly  be  referred 
to  the  final  influence  of  long-delayed  extraneous  or  foreign 


EXPERIENCE  OF  HAND-LABOR  COUNTRIES.        69 

economic  disturbances ;  as  has  been  the  case  in  Mexico  in 
respect  to  the  universal  depreciation  of  silver,  and  in  Ja- 
pan from  an  apparent  culmination  of  a  long  series  of  changes 
in  the  civilization  and  social  economy  of  that  country. 
There  have,  moreover,  been  no  displacements  of  labor,  or 
reduction  in  the  cost  of  labor  or  of  product,  in  all  those  in- 
dustries in  civilized  countries  where  machinery  has  not  been 
introduced  or  increased ;  as,  for  example,  in  domestic  serv- 
ice, in  amusements,  carriage-fare,  and  horse-hire,  in  hotel 
charges,  in  remuneration  of  authors,  artists,  teachers,  and  for 
legal  or  medical  services,  in  house-rents ;  in  such  depart- 
ments of  agriculture  as  the  raising  and  care  of  stock,  the 
growing  of  cotton,  of  flax,  hemp,  and  of  tropical  fibers  of 
like  character,  or  in  such  mechanical  occupations  as  mason- 
ry, painting,  upholstering,  plastering,  and  cigar-making,  or 
those  of  engineers,  firemen,  teamsters,  watchmen,  and  the 
like. 

Finally,  it  is  of  the  first  importance  to  note  how  all  the 
other  causes  which  have  been  popularly  regarded  as  having 
directly  occasioned,  or  essentially  contributed  to,  the  recent 
depression  of  trade  and  industry — with  the  exception  of  such 
as  are  in  the  nature  of  natural  phenomena,  as  bad  seasons 
and  harvests,  diseases  of  plants  and  animals,  disappearance 
of  fish,  and  the  like,  and  such  as  are  due  to  excessive  taxa- 
tion consequent  on  war  expenditures,  all  of  which  are  local, 
and  the  first  temporary  in  character — naturally  group  them- 
selves about  the  one  great  cause  that  has  been  suggested,  as 
sequences  or  derivatives,  and  as  secondary  rather  than  pri- 
mary in  their  influence ;  and  to  the  facts  and  deductions  that 
are  confirmatory  of  these  conclusions,  attention  is  next  in- 
vited. 


III. 

Over-production — Periodicity  of  trade  activity  and  stagnation — Increase  in 
the  volume  of  trade  with  accompanying  decline  in  profits — Depression  of 
agriculture  in  Europe — Changes  in  the  relations  of  labor  and  capital — 
Destruction  of  handicrafts — Antagonisms  of  machinery — Experience  of 
British  co-operative  societies — Influence  of  improvements  hi  production 
by  machinery  on  international  differences  in  wages — Changes  hi  the  de- 
tails of  product  distribution — Changes  in  retail  trade — Displacement  of 
the  "  middle-man." 

OVER-PRODUCTION". — The  most  popular  alleged  cause  of 
recent  economic  disturbances,  that  to  which  the  Royal  Com- 
mission of  Great  Britain  in  its  final  report  *  (December, 
1866),  and  the  United  States  Bureau  of  Labor  f  (1886),  have 

*  "  One  of  the  commonest  explanations  of  this  depression  or  absence  of  profit 
is  that  known  under  the  name  of  over-production ;  by  which  we  understand  the 
production  of  commodities,  or  even  the  existence  of  a  capacity  for  production, 
at  a  time  when  the  demand  is  not  sufficiently  brisk  to  maintain  a  remunerative 
price  to  the  producer,  and  to  afford  him  an  adequate  return  on  his  capital.  We 
think  such  an  over-production  has  been  one  of  the  most  prominent  features  of 
the  course  of  trade  during  recent  years ;  and  that  the  depression  under  which 
we  are  now  suffering  may  be  partially  explained  by  this  fact." — British  Com- 
mission, majority  report. 

"  By  over-production  we  understand  the  production  of  commodities  (or 
existence  of  the  agencies  of  production)  hi  excess,  not  of  the  capacity  of  con- 
sumption if  their  distribution  was  gratuitous,  but  of  the  demand  for  export  at 
remunerative  prices,  and  of  the  amount  of  income  or  earnings  available  for 
their  purchase  in  the  home  market.  The  depression  under  which  we  have  so 
long  been  suffering  is  undoubtedly  of  this  nature." — British  Commission, 
minority  report. 

t  "  Machinery — and  the  word  is  used  in  its  largest  and  most  comprehensive 
sense — has  been  most  potent  in  bringing  the  mechanically-producing  nations 
of  the  world  to  their  present  industrial  position,  which  position  consti- 
tutes an  epoch  in  their  industrial  development.  The  rapid  development  and 
adaptation  of  machinery  hi  all  the  activities  belonging  to  production  and  trans- 


OVER-PRODUCTION.  71 

assigned  a  prominent  place,  and  which  the  "  Trades-Union 
Congress  of  England  has  by  resolution  accepted  as  being,  in 
the  opinion  of  the  workmen  of  England,"  the  most  promi- 
nent cause,  is  "  over-production.'1''  In  a  certain  sense  there 
can  be  no  over-production  of  desirable  products  so  long  as 
human  wants  for  such  products  remain  unsatisfied.  But  it 
is  in  accordance  with  the  most  common  of  the  world's  ex- 
periences that  there  is  at  times  and  places  a  production  of 
most  useful  and  desirable  things  in  excess  of  any  demand  at 
remunerative  prices  to  the  producer.  This  happens,  in  some 
instances,  through  lack  of  progress  or  enterprise,  and  in 
others  through  what  may  be  termed  an  excess  of  progress 
or  enterprise.  An  example  of  the  first  is  to  be  found  in  the 
circumstance  that  in  the  days  of  Turgojb,  the  French  Minis- 
ter of  Finance  under  Louis  XVI,  there  were  at  times  in 
certain  departments  of  France  such  abundant  harvests  that 
wheat  was  almost  unmarketable,  while  in  other  and  not  far- 
distant  sections  of  the  country  there  was  such  a  lack  of  food 
that  the  inhabitants  perished  of  hunger ;  and  yet,  through 
the  absence  of  facilities  for  transportation  and  communica- 
tion of  intelligence,  the  influence  of  bad  laws,  and  the  moral 
inertia  of  the  people,  there  was  no  equalization  of  condi- 
tions.* 


portation  have  brought  what  is  commonly  called  over-production ;  so  that 
machinery  and  over-production  are  two  causes  so  closely  allied  that  it  is  diffi- 
cult to  discuss  the  one  without  taking  the  other  into  consideration.  .  .  .  The 
direct  results,  so  far  as  the  present  period  is  concerned,  of  this  wonderful  and 
rapid  extension  of  power-machinery  are,  for  the  countries  involved,  over-pro- 
duction, or,  to  be  more  correct,  bad  or  injudicious  production ;  that  is,  that 
condition  of  production  of  things  the  value  of  which  depends  upon  immediate 
consumption,  or  consumption  by  that  portion  of  the  population  of  the  world 
already  requiring  the  goods  produced." — Report  of  the  United  States  Commis- 
sioner of  Labor,  1886,  pp.  88,  89. 

*  This  experience  of  France  in  the  last  quarter  of  the  eighteenth  century  is 
repeating  itself  at  the  present  day  in  China.  General  Wilson,  in  his  recent 
"  Study  of  China"  (1887),  states  that  "  overmen  million  people  died  from  star- 
vation about  ten  years  ago  in  the  provinces  of  Shansi  and  Shensi  alone,  while 
abundance  and  plenty  were  prevailing  in  other  parts  of  the  country.  Every 


72  RECENT  ECONOMIC  CHANGES. 

An  example  of  the  second,  intensified  to  a  degree  never 
before  experienced,  is  to  be  found  in  the  results  of  the  im- 
provements in  production  and  distribution  which  have  been 
made  especially  effective  within  the  last  quarter  of  a  cent- 
ury. A  given  amount  of  labor,  operating  through  machin- 
ery, produces  or  distributes  at  least  a  third  more  product  on 
the  average,  in  given  time,  than  ever  before.  Note  the  nat- 
ural tendency  of  human  nature  under  the  new  conditions. 
The  machinery  which  thus  cheapens  and  increases  product 
is,  as  a  rule,  most  costly,  and  entails  a  like  burden  of  inter- 
est, insurance,  and  care,  whether  it  is  at  work  or  idle  ;  and 
the  possessor  of  it,  recognizing  this  fact,  naturally  desires  to 
convert  outlay  into  income  by  utilizing  it  to  the  greatest 
extent  possible.  Again,  a  man  who  has  learned  by  experi- 
ence that  he  can  dispose  of  a  certain  amount  of  product  or 
service  at  a  profit,  naturally  reasons  that  a  larger  amount 
will  give  him,  if  not  a  proportionally  greater,  at  least  a  larger 
aggregate  profit ;  and  as  the  conditions  determining  demand 
are  not  only  imperfectly  known,  but  to  a  certain  extent  in- 
capable of  exact  determination,  he  discards  the  idea  of  any 
risk,  even  if  he  for  a  moment  entertains  it,  and  pushes  in- 
dustrial effort  to  its  maximum.  And  as  this  process  is  gen- 
eral, and,  as  a  rule,  involves  a  steady  increase  in  the  improved 
and  constantly  improving  instrumentalities  of  production 
and  distribution,  the  period  at  length  arrives  when  the  in- 
dustrial and  commercial  world  awakens  to  the  fact  that 
there  is  a  product  disproportionate  to  any  current  remuner- 
ative demand.  Here,  then,  is  one  and  probably  the  best  ex- 
planation of  the  circumstance  that  the  supply  of  very  many 
of  the  great  articles  and  instrumentalities  of  the  world's  use 
and  commerce  has  increased,  during  the  last  ten  or  fifteen 
years,  in  a  far  greater  ratio  than  the  contemporaneous  in- 


effort  was  made  to  send  food  into  the  stricken  regions,  but  owing  to  the  entire 
absence  of  river  and  canal  navigation,  as  well  as  of  railroads,  few  of  the  suf- 
fering multitudes  could  be  reached." 


A  NEW  ECONOMIC  FEATURE.  73 

crease  in  the  world's  population,  or  of  its  immediate  con- 
suming capacity. 

Another  interesting  feature  of  the  situation,  and  one 
which  has  been  especially  pointed  out  by  Prof.  Lexis,  of 
Gottingen,  is,  that  "  over-production "  in  recent  years  has 
resulted  largely  from  the  establishment  of  many  new  indus- 
trial enterprises  whose  capacity  for  production  far  exceeds 
any  concurrent  market  demand ;  as  is  especially  exemplified 
in  the  case  of  the  manufacture  of  iron.  "  When  the  con- 
ditions of  production  are  favorable,  each  of  these  establish- 
ments strives  to  bring  to  market  a  quantity  corresponding 
to  its  actual  power  of  production ;  and  even  if  this  can  not 
be  done,  the  recognition  of  tendencies  and  possibilities  re- 
sults in  causing  a  depression  of  prices,  under  which  the  less 
favored  undertakings  can  earn  no  profit,  or,  indeed,  suffer 
loss."  It  was  formerly  a  general  assumption  that,  when 
price  no  longer  equaled  the  cost  of  production  and  a  fair 
profit  on  capital,  production  would  be  restricted  or  sus- 
pended ;  that  the  less  favored  producers  would  be  crowded 
out,  and  by  the  relief  thus  afforded  to  the  market  normal 
prices  would  be  again  restored.  But  this  doctrine  is  no 
longer  applicable  to  the  modern  methods  of  production. 
Those  engaged  in  great  industrial  enterprises,  whether  they 
form  joint-stock  companies  or  are  simply  wealthy  individu- 
als, are  invested  with  such  economic  powers  that  none  of 
them  can  be  easily  pushed  to  the  wall,  inasmuch  as  they 
can  continue  to  work  under  conditions  that  would  not  per- 
mit a  small  producer  to  exist.  Examples  are  familiar  of 
joint-stock  companies  that  have  made  no  profit  and  paid  no 
dividends  for  years,  and  yet  continue  active  operations.  The 
shareholders  are  content  if  the  plant  is  kept  up  and  the 
working  capital  preserved  intact,  and  even  when  this  is 
not  done,  they  prefer  to  submit  to  assessments,  or  issue  pref- 
erence shares  and  take  them  up  themselves  rather  than  go 
into  liquidation,  with  the  chance  of  losing  their  whole  capi- 
tal. Another  feature  of  such  a  condition  of  things  is,  that 


74  RECENT  ECONOMIC  CHANGES. 

the  war  of  competition  in  which  such  industrial  enterprises 
are  usually  engaged  is  mainly  carried  on  by  a  greater  and 
greater  extension  of  the  market  supply  of  their  products. 
An  illustration  of  this  is  afforded  in  the  recent  history  of 
the  production  of  copper.  When  in  1885  the  United  States 
produced  and  put  on  to  the  market  seventy-four  thousand 
tons,  as  against  forty  thousand  tons  in  1882,  the  world's 
prices  of  copper  greatly  declined.  A  large  number  of  the 
smaller  producers  were  compelled  to  suspend  operations,  or 
were  entirely  crushed ;  but  the  great  Spanish  and  other  im- 
portant mines  endeavored  "  to  offset  the  diminution  of  profit 
on  the  unit  of  quantity "  by  increasing  their  production ; 
and  thus  the  price  of  copper  continued  to  decline  until  it 
reached  a  lower  figure  than  ever  before  known  in  history. 

Under  such  circumstances  industrial  over-production — 
manifesting  itself  in  excessive  competition  to  effect  sales,  and 
a  reduction  of  prices  below  the  cost  of  production — may  be- 
come chronic ;  and  there  appears  to  be  no  other  means  of 
avoiding  such  results  than  that  the  great  producers  should 
come  to  some  understanding  among  themselves  as  to  the 
prices  they  will  ask  ;  which  in  turn  naturally  implies  agree- 
ments as  to  the  extent  to  which  they  will  produce.  Up  to  this 
point  of  procedure  no  exception  on  the  part  of  society  can 
well  be  taken.  But  such  an  agreement,  once  perfected  and 
carried  out,  admits  of  an  almost  entire  control  of  prices  and 
the  establishment  of  monopolies,  in  the  management  of 
which  the  rights  of  the  public  may  be  wholly  ignored.  So- 
ciety has  practically  abandoned — and  from  the  very  necessity 
of  the  case  has  got  to  abandon,  unless  it  proposes  to  war 
against  progress  and  civilization — the  prohibition  of  indus- 
trial concentrations  and  combinations.  The  world  demands 
abundance  of  commodities,  and  demands  them  cheaply ;  and 
experience  shows  that  it  can  have  them  only  by  the  employ- 
ment of  great  capital  upon  the  most  extensive  scale.*  The 

*  Adam  Smith,  in  his  "  Wealth  of  Nations,"  published  in  1776,  in  dis- 


THE  "  TRUST  "  PROBLEM.  75 

problem,  therefore,  which  society  under  this  condition  of 
affairs  has  presented  to  it  for  solution  is  a  difficult  one, 
and  twofold  in  its  nature.  To  the  producer  the  question  of 
importance  is,  How  can  competition  be  restricted  to  an  ex- 
tent sufficient  to  prevent  its  injurious  excesses?  To  the 
consumer,  How  can  combination  be  restricted  so  as  to  secure 
its  advantages  and  at  the  same  time  curb  its  abuses  ? 

Another  cause  of  over-production  is  undoubtedly  due  to 
an  agency  which  has  never  before  in  the  history  of  the  world 
been  operative  to  the  extent  that  it  is  at  present.  With  the 
great  increase  of  wealth  that  has  followed  the  increased 
control  over  the  forces  of  nature  and  their  utilization  for 
production  and  distribution,  there  has  come  a  desire  to  con- 
vert this  wealth  into  the  form  of  negotiable  securities  paying 
dividends  or  interest  with  regularity,  and  on  the  recipiency 
of  which  the  owner  can  live  without  personal  exertion  or 
risk  of  the  principal.  Hence  a  stimulus  for  the  undertaking 
of  new  enterprises  which  can  create  and  market  such  secu- 
rities ;  and  these  enterprises,  whether  in  the  nature  of  new 
railroad,  manufacturing,  or  mining  corporations,  once  de- 
veloped, must  go  on  producing  and  selling  their  products  or 
services  with  or  without  a  profit  in  order  to  meet  their  obli- 
gations and  command  a  share  of  previously  existing  trade. 
Production  elsewhere  as  a  consequence,  is,  interfered  with, 
displaced,  and  in  not  a  few  cases,  by  reason  of  better  condi- 
tions, permanently  undersold.  And  the  general  result  is 
appropriately  recognized  by  the  term  "over-production." 

Furthermore,  in  anticipation  of  such  consequences,  the 
tendency  and  the  interest  of  every  successful  manufacturing 

cussing  tho  effect  of  legislation  and  corporate  regulations  in  limiting  compe- 
tition, clearly  recognizes  the  tendency  of  combinations  to  advance  prices,  and 
the  difficulty  of  limiting  or  preventing  their  influence  by  statute  enactments. 
/  "People  of  the  same  trade,"  he  says,  "seldom  meet  together,  even  for  merri- 
I    ment  and  diversion,  but  the  conversation  ends  in  a  conspiracy  against  tho 
I    public,  or  in  some  contrivance  to  r^ge  prices."     He,  however,  admitted  that 
1    it  was  "  impossible  to  prevent  such  meetings  by  any  law  which  either  could 
\  be  executed  or  would  bo  executed  with  liberty  and  justice." 


76  RECENT  ECONOMIC  CHANGES. 

combination  is  to  put  the  prices  of  its  products  down  to  a 
figure  where  it  will  not  pay  for  speculators  to  form  new  com- 
petitive stock  companies  to  be  bought  off  or  crushed  by  it. 
For,  if  it  did  keep  up  high  profit-assuring  prices,  one  of  two 
things  would  eventually  happen :  either  new  factories  would 
be  started ;  or  the  inventive  spirit  of  the  age  would  devise 
cheaper  methods  of  production,  or  some  substitute  for  the 
product  they  furnished,  and  so  ruin  the  first  combination 
beyond  the  possibility  of  redemption.  And  hence  we  have 
here  another  permanent  agency,  antagonistic  to  the  mainte- 
nance of  high  and  remunerative  prices. 

But  although  such  is  substantially  a  correct  general 
exposition  of  the  recent  course  of  industrial  events,  and 
although  all  the  agencies  concerned  in  reducing  the  time 
and  labor  necessary  to  effect  a  given  result  in  the  world's 
work  have  undoubtedly  acted  to  a  certain  extent  and  in  all 
cases  in  unison,  the  diversity  of  method,  under  which  the 
supply  in  excess  of  remunerative  demand,  or  the  so-called 
over-production,  has  been  specially  effected,  is  not  a  little 
curious.  Thus,  in  the  case  of  crude  iron  and  steel,  cotton 
fabrics  and  textiles  generally,  coal,  most  articles  of  metal 
fabrication,  ships,  and  the  like,  the  increase  and  cheapened 
supply  have  been  brought  about  mainly  through  improve- 
ments in  the  machinery  and  economy  of  production  ;  while 
in  the  case  of  wheat,  rice,  and  other  cereals,  wool,  cotton- 
fibers,  meats,  and  petroleum,  like  results  have  been  mainly 
occasioned  by  improvements  in  the  machinery  and  economy 
of  distribution.  On  the  other  hand,  in  the  case  of  copper, 
tin,  nickel,  silver,  quicksilver,  quinine,  and  some  important 
chemicals,  over-production,  in  the  sense  as  above  defined, 
has  been  almost  entirely  due  to  the  discovery  or  develop- 
ment of  new  and  abundant  natural  sources  of  supply.  It  is 
also  not  to  be  overlooked  that  other  factors,  which  can  not 
properly  be  included  within  the  sphere  of  the  influence  of 
recent  discoveries  and  inventions,  have  also  powerfully  con- 
tributed to  bring  about  the  so-called  phenomenon  of  over- 


production.  Thus  the  changes  in  the  consumption  of  some 
commodities  is  entirely  dependent  upon  the  increase  in  the 
tastes  and  intelligence  of  the  masses.  In  the  case  of  wheat, 
there  is  some  evidence  to  the  effect  that  the  consumption  of 
those  who  eat  wheat  bread  habitually  does  not  indefinitely 
expand  with  increasing  means,  but,  on  the  contrary,  that  it 
decreases  with  the  ability  to  procure  a  greater  variety  of 
food.  It  is  also  undeniable  that  the  culture  of  the  manual 
laborers  of  the  world  has  not  advanced  concurrently,  in  re- 
cent years,  with  the  increased  and  cheapened  production  of 
such  articles.  Many  things,  consequently,  have  been,  as  it 
were,  showered  upon  these  classes  which  they  do  not  know 
how  to  use,  and  do  not  feel  that  they  need,  and  for  which, 
therefore,  they  can  create  no  market.  A  man  who  has 
long  been  contented  with  one  shirt  a  week  is  not  likely  to 
wish  to  use  seven  immediately,  even  if  he  can  buy  seven  for 
the  price  that  he  formerly  paid  for  one,  and  his  wife  takes 
pleasure  in  doing  his  washing. 

Experience  shows  that  the  extremely  high  wages  which 
were  paid  in  Great  Britain  and  in  Belgium  in  the  coal  and 
iron  business  from  1868  to  1873  did  nothing  to  permanently 
raise  the  standard  of  living  among  the  laborers  directly  con- 
cerned. They  spent  their  increased  earnings  in  expensive 
food,  and  even  in  wines  of  high  cost  and  quality ;  and  did 
not  make  the  slightest  attempt  to  improve  their  style  of 
living  in  respect  to  dress,  furniture,  or  dwellings.  That  a 
continuance  of  such  wages  would  eventually  give  the  "  coal " 
and  "  iron  "  miner  the  wants  and  habits  of  merchants  and 
professional  men,  is  possible ;  but  it  would  require  consider- 
able time — probably  more  than  one  generation — to  effect  it. 
"  The  comforts  accessible  to  the  workingman,  and  which  he 
makes  use  of  and  considers  necessaries,  have  certainly  been 
greatly  multiplied  during  the  last  hundred  years ;  but  they 
have  become  necessaries  very  slowly,  and  anybody  who  un- 
dertook to  furnish  many  of  them  even  fifty  years  ago  would 
probably  have  been  ruined  in  the  experiment." 


78  RECENT  ECONOMIC  CHANGES. 

One  of  the  inevitable  results  of  a  supply  of  product  or 
service  in  excess  of  remunerative  demand  (i.  e.,  over-pro- 
duction) is  a  decline  of  price ;  and  as  the  power  of  produc- 
tion and  distribution  has  been  increased  in  an  unexampled 
degree  since  1873  (as  has  been  already  shown),  the  prices 
of  nearly  all  the  great  staple  commodities  of  commerce  and 
consumption  have  declined  within  the  same  period  (as  will 
be  hereafter  shown)  in  manner  altogether  without  precedent 
in  all  former  commercial  history.  That  this  experience  has 
been  altogether  natural,  and  what  might  have  been  expected 
under  the  circumstances,  will  appear  from  the  following 
considerations  : 

If  production  exceeds,  by  even  a  very  small  percentage, 
what  is  required  to  meet  every  current  demand  for  con- 
sumption, the  price  which  the  surplus  will  command  in  the 
open  market  will  govern  and  control  the  price  of  the  whole ; 
and  if  it  can  not  be  sold  at  all,  or  with  difficulty,  an  intense 
competition  on  the  part  of  the  owners  of  accumulated  stocks 
to  sell  will  be  engendered,  with  a  great  reduction  or  annihi- 
lation of  all  profit.  Mr.  Jojffl.  Brighjb.  of  England,  in  one 
of  his  recent  speeches,  relates  the  following  incident  of  per- 
sonal experience :  "  I  know,"  he  said,  "  a  company  manu- 
facturing chemicals  of  some  kind  extensively,  and  one  of 
the  principal  persons  in  it  told  me  that  in  one  of  those  hi^h 
years,  1872,  1873,  and  1874,  the  profits  of  that  concern  were 
£80,000,  and  he  added  that  when  the  stock-taking  and  its 
results  were  communicated  to  the  leading  owner  in  the  busi- 
i  ness,  he  made  this  very  wise  observation :  '  I  am  very  sorry 
to  hear  it,  for  you  may  depend  upon  it  in  the  years  that  are 
to  come  we  shall  have  to  pay  the  whole  of  it  back ' ;  and  in 
1  speaking  to  me  of  it  he  said,  '  It  is  quite  true,  because  for 
1  several  years  we  have  been  able  to  make  no  dividend  at  all.' 
Well,  why  was  that  ?  The  men  who  were  making  so  large 
incomes  at  that  time  reinvested  their  money  in  increasing 
their  business.  Many  of  the  concerns  in  this  trade  doubled 
their  establishments,  new  companies  were  formed,  and  so 


OVERSTOCKED  MARKETS.  79 

the  produce  of  their  manufacture  was  extended  to  such  a 
degree  that  the  prices  went  down  and  the  profits  vanished." 

The  recent  history  of  the  nail-trade  in  the  United  States 
furnishes  also  a  chapter  of  analogous  experience.  From 
1881  to  1884  the  American  nail  manufacture  was  exceed- 
ingly profitable ;  and  during  those  years,  as  a  natural  conse- 
quence, most  of  the  existing  mills  increased  their  capacity, 
and  some  more  than  doubled  it.  New  mills  also  were  built 
East  and  West,  until  the  nail-producing  power  of  the  coun- 
try nearly  doubled,  while  the  consuming  capacity  increased 
only  about  twenty  per  cent.  The  further  result  was  that 
prices  were  forced  down  by  an  overstocked  market,  until 
nails  were  sold  at  from  ten  to  fifteen  per  cent  below  cost, 
and  in  some  instances  mills  that  "  could  stand  alone  "  were 
accused  of  intentionally  forcing  down  prices  in  order  to 
bankrupt  weaker  competitors.  In  the  end  prices  were  in  a 
measure  restored  by  a  combination  and  agreement  among 
manufacturers  to  restrict  production. 

Another  illustration  to  the  same  effect  is  to  be  found  in 
the  present  remarkable  condition  of  the  milling  (flour)  in- 
terest of  the  United  States,  which  was  thus  described  in  an 
address  before  the  "National  Millers'  Association"  by  its 
vice-president,  at  their  annual  meeting  at  Buffalo,  in  June, 
1888: 

"  A  new  common  enemy,"  he  said,  "  has  sprung  up,  which  threatens 
our  property  with  virtual  confiscation.  .  .  .  Large  output,  quick  sales, 
keen  competition,  and  small  profits  are  characteristics  of  all  modern 
trade.  We  have  the  advantage  in  our  business  of  always  being  in 
fashion ;  the  world  requires  so  much  bread  every  day,  a  quantity  which 
can  be  ascertained  with  almost  mathematical  accuracy.  .  .  .  But  our 
ambition  has  overreached  our  discretion  and  judgment.  We  have 
all  participated  in  the  general  steeple-chase  for  pre-eminence ;  the 
thousand-barrel  mill  of  our  competitor  had  to  be  put  in  the  shade  by  a 
two-thousand-barrel  mill  of  our  own  construction ;  the  commercial  tri- 
umph of  former  seasons  had  to  be  surpassed  by  still  more  dazzling 
figures.  As  our  glory  increased  our  profits  became  smaller,  until  now 
the  question  is  not  how  to  surpass  the  record,  but  how  to  maintain  our 


80  EECENT  ECONOMIC  CHANGES. 

position  and  how  to  secure  what  we  have  in  our  possession.  ...  In 
the  general  scramble  we  have  gradually  lost  sight  of  the  inexorable 
laws  of  supply  and  demand.  We  have  been  guilty  of  drifting  away 
from  sound  trade  regulations  until  our  business  has  not  only  ceased  to 
be  profitable  but  carries  with  it  undue  commercial  hazard." 

As  prices  fall  and  profits  shrink,  producers  working  on 
insufficient  capital,  or  by  imperfect  methods,  are  soon  obliged, 
in  order  to  meet  impending  obligations,  to  force  sales  through 
a  further  reduction  of  prices ;  and  then  stronger  competi- 
tors, in  order  to  retain  their  markets  and  customers,  are 
compelled  to  follow  their  example ;  and  this  in  turn  is  fol- 
lowed by  new  concessions  alternately  by  both  parties,  until 
gradually  the  industrial  system  becomes  depressed  and  de- 
moralized, and  the  weaker  succumb  (fail),  with  a  greater  or 
less  destruction  of  capital  and  waste  of  product.  Affairs 
now  having  reached  their  maximum  of  depression,  recovery 
slowly  commences.  Consumption  is  never  arrested,  even  if 
production  is,  for  the  world  must  continue  to  consume  in 
order  that  life  and  civilization  may  exist.  The  continued 
increase  of  population  also  increases  the  aggregate  of  con- 
sumption ;  and,  finally,  the  industrial  and  commercial  world 
again  suddenly  realizes  that  the  condition  of  affairs  has  been 
reversed,  and  that  now  the  supply  has  become  unequal  to  the 
demand.  Then  such  producers  as  have  "  stocks  on  hand," 
or  the  machinery  of  production  ready  for  immediate  and 
effective  service,  realize  large  profits ;  and  the  realization  of 
this  fact  immediately  tempts  others  to  rush  into  production, 
in  many  cases  with  insufficient  capital  (raised  often  through 
stock  companies),  and  without  that  practical  knowledge  of 
the  detail  of  their  undertaking  which  is  necessary  to  insure 
success,  and  the  old  experience  of  inflation  and  reaction  is 
again  and  again  repeated. 

Hence  the  explanation  of  the  now  much  -  talked  -  of 
"  periods  "  or  "  cycles  "  of  panic  and  speculation,  of  trade 
activity  and  stagnation.  Their  periodical  occurrence  has 
long  been  recognized,  and  the  economic  principles  involved 


PERIODICITY  OF  PANICS.  81 

in  them  have  long  been  understood.*  But  a  century  ago  or 
more,  when  such  economic  changes  occurred  in  any  coun- 
try, the  resulting  disturbances  were  mainly  confined  to  such 
country — as  was  notably  the  case  in  the  "Mississippi  Scheme" 
of  John  Law  in  France,  and  the  English  "  South-Sea  Bub- 
ble," in  the  last  century,  or  the  severe  industrial  and  finan- 
cial crises  which  occurred  in  Great  Britain  in  the  earlier 
years  of  the  present  century — and  people  of  other  countries, 
hearing  of  them  after  considerable  intervals,  and  then 
vaguely  through  mercantile  correspondence,  were  little  trou- 
bled or  interested.  During  recent  years,  however,  they  have 

*  The  theory,  more  or  less  widely  entertained,  that  there  is  some  law  gov- 
erning and  occasioning  the  regular  recurrence  of  periods  of  commercial  and 
financial  disaster  or  prosperity,  has  thus  far  not  been  sustained  by  investiga- 
tion. Scarcity  and  high  prices  tend  to  cause  increased  production  and  induce 
speculation ;  but  the  supply  of  different  commodities  is  governed  by  different 
laws,  and  it  would  be  difficult  to  name  any  two  classes  of  products  that  are 
controlled  by  the  same  natural  conditions.  In  the  case  of  some  commodities 
it  requires  but  a  brief  time  to  secure  an  increased  production ;  in  the  case  of 
others,  months,  and  even  years,  are  requisite.  As  respects  agricultural  pro- 
ductions, no  locality  accessible  by  modern  means  of  transportation  is  depend- 
ent on  its  own  supplies,  or  makes  its  own  prices ;  and  the  influences  which 
afflict  one  part  of  the  world  with  disaster  bring  bountiful  supplies  to  others. 
Hence  it  follows  that  any  periodical  cause,  common  in  its  effects  upon  all 
products,  is  impossible.  Neither  can  it  be  conceived  how  periodical  changes 
in  prices  can  result  from  any  possible  law  of  nature,  unless  it  can  be  shown 
that  such  laws  exist  and  operate  with  uniformity  on  the  human  mind  and  on 
the  development  of  the  human  intellect,  which  has  not  yet  been  done.  One 
of  the  most  noted,  and  at  the  same  time  one  of  the  most  empirical,  attempts  to 
found  predictions  as  to  future  conditions  of  business  and  prices  upon  past 
commercial  experiences,  is  embodied  in  a  little  book  entitled  "  Benner's  Prophe- 
cied^"  the  work  of  an  Ohio  farmer  named  Benner,  which,  first  published 
about  1875,  has  since  passed  through  several  editions  and  been  widely  circu- 
lated and  quoted.  Its  prophecies  relate  mainly  to  the  priges  of  pig^h-on  and 
hogs,  and  to  the  next  period  of  commercial  and  financial  disaster.  In  the  case 
orpig-iron,  it  is  claimed  that  the  prophecies  have  been  in  a  measure  fulfilled; 
but  in  the  case  of  hogs,  not  one  has  been.  A  careful  analysis  of  the  book  lias 
furthermore  proved  that  it  is  not  of  sufficient  account  or  correctness  to  war- 
rant any  serious  attempt  at  the  refutation  of  its  conclusions,  which  seem  to  be 
based  on  little  more  than  the  assumption  that  what  has  been  in  respect  to 
prices  will  again  happen ;  and  that  the  cause  of  periodicity  of  panics  is  to  be 
found  "  in  our  solar  system." 


82  RECENT  ECONOMIC  CHANGES. 

become  less  local  and  more  universal,  because  the  railroad, 
the  steamship,  and  the  telegraph  have  broken  down  the  bar- 
riers between  nations,  and,  by  spreading  in  a  brief  time  the 
same  hopes  and  fears  over  the  whole  civilized  world,  have 
made  it  impossible  any  longer  to  confine  the  speculative 
spirit  to  any  one  country.  So  that  now  the  announcement 
of  any  signal  success  in  any  department  of  production  or 
mercantile  venture  at  once  fires  the  imagination  of  the  en- 
terprising and  reckless  in  every  country,  and  quickly  incites 
to  operations  which  without  such  a  stimulus  would  probably 
not  be  undertaken.  At  the  same  time,  the  command  through 
the  telegraph  of  instantaneous  information  throughout  the 
world  of  the  conditions  and  prospects  of  all  markets  for  all 
commodities  has  also  undoubtedly  operated  to  impart  steadi- 
ness to  prices,  increase  the  safety  of  mercantile  and  manu- 
facturing operations,  and  reduce  the  elements  of  speculation 
and  of  panics  to  the  lowest  minimum. 

One  universally  recognized  and,  to  some  persons,  per- 
plexing peculiarity  of  the  recent  long-continued  depression 
in  trade  is  the  circumstance,  that  while  profits  have  been  so 
largely  reduced  that,  as  the  common  expression  goes,  "  it  has 
not  paid  to  do  business,"  the  volume  ofjrade  throughout 
the  world  has  not  contracted,  but,  measured  by  quantities 
rather  than  by  values,  has  in  many  departments  notably  in- 
creased. The  following  are  some  of  the  more  notable  exam- 
ples of  the  evidence  that  can  be  offered  in  confirmation  of 
this  statement : 

The  years  1879,  1880,  and  1881  for  the  United  States 
were  years  of  abundant  crops  and  great  foreign  demand,  and 
are  generally  acknowledged  to  have  been  prosperous ;  while 
the  years  1882,  1883,  and  1884  are  regarded  as  having  been 
years  of  extreme  depression  and  reaction.  And  yet  the 
movement  of  railroad  freights  throughout  the  country  great- 
ly increased  during  this  latter  as  compared  with  the  former 
period;  the  tonnage  carried  by  six  railroads  centering  at 
Chicago  in  1884  having  been  nearly  thirty-three  per  cent 


VOLUME  OP  TRADE  AND  PRICES.  83 

greater  than  in  1881 ;  and  the  tonnage  carried  one  mile  by 
all  the  railroads  of  the  United  States  in  1884 — a  year  of  ex- 
treme depression — having  been  5,000,000,000  in  excess  of 
that  carried  in  1882 ;  and  this,  notwithstanding  there  was  a 
great  falling  off,  in  1884,  in  the  carriage  of  material  for  new 
railroad  construction.  Again,  the  foreign  commerce  of  the 
United  States,  measured  in  dollars,  largely  declined  during 
the  same  later  period;  but,  measured  in  quantities,  there 
was  but  little  decrease,  and  in  the  case  of  not  a  few  leading 
articles  a  notable  increase.  Thus,  for  the  year  1885  the 
total  value  of  the  foreign  commerce  of  the  country  in  mer- 
chandise was  $93,251,921  less  than  in  the  preceding  year 
(1884),  but  of  this  decrease  $90,170,364,  according  to  the 
estimates -of  the  United  States  Bureau  of  Statistics,  repre- 
sented a  decline  in  price.  An  export  of  70,000,000  bushels 
of  wheat  from  the  United  States  in  1884  returned  $75,000,- 
000 ;  while  an  export  of  84,500,000  in  1885  gave  less  than 
$73,000,000.  An  export  of  389,000,000  pounds  of  bacon  and 
hams  in  1884  brought  in  nearly  $40,000,000 ;  but  shipments 
of  400,000,000  pounds  in  1885  returned  but  $37,000,000,  or 
an  increase  of  foreign  sales  of  about  11,000,000  pounds  was 
accompanied  by  a  decline  of  about  $3,000,000  in  price.  In 
1877,  216,287,891  gallons  of  exported  petroleum  were  valued 
at  $44,209,360  ;  but  in  1886,  303,911,698  gallons  (or  87,623,- 
000  gallons  more)  were  valued  at  only  $24,685,767,  a  decline 
in  value  of  $19,683,000.  But  the  most  remarkable  example 
of  changes  of  this  character  is  to  be  found  in  the  case  of 
sugar.  Thus,  in  1883  the  United  States  imported  2,023,- 
000,000  pounds  of  sugar,  for  which  it  paid  $91,959,000.  In 
1885,  2,548,000,000  pounds  were  imported,  at  a  cost  of  $68,- 
531,000;  or  a  larger  quantity  by  525,000,000  pounds  was 
imported  in  1885,  as  compared  with  1883,  for  $23,428,000 
less  money. 

The  statistics  of  the  recent  foreign  trade  of  Great  Britain 
also  exhibit  corresponding  results.  For  example,  the  de- 
clared aggregate  value  of  British  exports  and  imports  for 


84 

1883  were  £667,000,000  as  compared  with  £682,000,000  in 
1873,  an  apparent  decline  of  no  little  magnitude.  But  if 
the  aggregate  of  the  foreign  trade  of  Great  Britain  for  1883 
had  been  valued  at  the  prices  of  1873,  the  total,  in  place  of 
£667,000,000,  would  have  been  £861,000,000,  or  an  increase 
for  the  decade  of  about  thirty  per  cent. 

Again,  the  declared  value  of  British  imports  retained  for 
home  consumption  for  the  year  1887  was  £302,828,000 ;  but 
had  they  been  valued  at  the  same  prices  as  were  paid  in 

1886,  their  cost  would  have  been  £308,145,000.     The  saving 
in  the  purchases  of  foreign  products  by  Great  Britain  in 

1887,  owing  to  the  fall  of  prices,  as  compared  with  1886, 
was,  therefore,  £5,317,000.     On  the  other  hand,  if  the  value 
of  the  British  exports  for  1887,  namely,  £221,398,000,  had 
been  sold  on  the  same  terms  as  in  1886,  their  value  would 
have  amounted  to  £222,559,000,  showing  a  comparative  loss 
for  the  year  of  £1,161,000.     Comparing  quantities,  however, 
the  volume  of  the  British  foreign  trade  for  1887,  in  com- 
parison with  that  of  1886,  was  about  five  per  cent  larger  in 
respect  to  imports  and  4'8  per  cent  in  respect  to  exports. 

An  explanation  of  this  economic  phenomenon  of  recent 
years,  namely,  a  continuing  increase  in  the  volume  of  trade, 
with  a  continuing  low  rate  or  decline  in  profits,  may  be  found 
in  the  following  circumstances:  One  constant  result  of  a 
decline  in  prices  is  an  increase  (but  not  necessarily  propor- 
tional or  even  universal)  in  consumption.  Evidence  on  this 
point,  derived  from  recent  experiences,  will  be  referred  to 
hereafter;  but  the  following  example  illustrates  how  this 
economic  principle  manifests  itself  even  under  unexpected 
conditions :  In  1878  sulphate  of  quinine  ruled  as  high  for  a 
time  on  the  London  market  as  $3.96  per  ounce,  in  bulk.  In 
1887  the  quotation  was  as  low  as  thirty  cents  per  ounce. 
Quinine  is  used  mainly  as  a  medicine,  and  is  so  indispensable 
in  certain  ailments  that  it  may  be  presumed  that  its  cost  in 
1878  was  no  great  restriction  on  its  consumption,  and  that 
no  great  increase  in  its  use  from  a  reduction  in  price  was  to 


INCREASE  IN  MATERIAL  CONSUMPTION.  85 

be  expected,  any  more  than  an  increase  in  the  use  of  coffins 
for  a  similar  reason — both  commodities  being  used  to  the 
extent  that  they  are  needed,  even  if  a  denial  of  the  use  of 
other  things  is  necessary  in  order  to  permit  of  their  procure- 
ment. And  yet,  that  increase  in  the  cheapness  of  quinine 
has  been  followed  by  a  notable  increase  in  its  consumption, 
is  shown  by  the  fact  that  the  importation  of  cinchona-bark 
— from  which  quinine  is  manufactured — into  Europe  and 
the  United  States  during  recent  years  has  notably  increased, 
4,787,000  pounds  having  been  imported  into  the  United 
States  in  1887,  as  compared  with  an  import  of  2,580,000  in 
1883,  the  imports  of  quinine  itself  at  the  same  time  increas- 
ing from  1,055,764  ounces,  valued  at  $1,809,000,  in  1883,  to 
2,180,157  ounces,  valued  at  $1,069,918,  in  1887.  The  fol- 
lowing statement  also  illustrates  even  more  forcibly  the 
ordinary  effect  of  a  reduction  of  price  on  the  consumption 
of  the  more  staple  commodities :  Thus,  a  reduction  (saving) 
of  6d.  (twelve  cents)  per  week  in  the  cost  of  the  bread  of 
every  family  in  Great  Britain  (a  saving  which,  on  the  basis 
of  the  decline  in  the  wholesale  prices  of  wheat  within  the 
last  decade,  would  seem  to  have  been  practicable)  has  been 
estimated  as  equivalent  to  giving  a  quarter  of  a  million 
pounds  sterling,  or  $1,250,000  per  week,  to  the  whole  people 
of  the  kingdom  to  spend  for  other  things. 

The  evidence  is  also  conclusive  that  the  ability  of  the 
population  of  the  world  to  consume  is  greater  than  ever  be- 
fore, and  is  rapidly  increasing.  Indeed,  such  a  conclusion 
is  a  corollary  from  the  acknowledged  fact  of  increased  pro- 
duction— the  end  and  object  of  all  production  being  con- 
sumption. Take,  for  example,  the  United  States,  with  its 
present  population  of  sixty-five  millions — a  population  that 
undoubtedly  produces  and  consumes  more  per  head  than 
any  other  equal  number  of  people  on  the  face  of  the  globe, 
and  is  producing  and  consuming  very  much  more  than  it 
did  ten  or  even  five  years  ago.  The  business  of  exchanging 
the  products  or  services,  and  of  satisfying  thereby  the  wants 


86  RECENT  ECONOMIC  CHANGES. 

of  such  a  people  is,  therefore,  necessarily  immense,  and  with 
the  annual  increase  of  population,  and  with  consuming 
power  increasing  in  an  even  larger  ratio,  the  volume  of  such 
business  must  continue  to  increase.  And  what  is  true  of 
the  United  States  is  true,  in  a  greater  or  less  degree,  of  all 
the  other  nations  of  the  globe.  There  is,  therefore,  nothing 
inconsistent  or  mysterious  in  the  maintenance  or  increase 
in  the  volume  of  the  world's  business  contemporaneously 
with  a  depression  of  trade — in  the  sense  of  a  reduction  of 
profits — occasioned  by  an  intense  competition  to  dispose  of 
commodities,  which  have  been  produced  under  comparative- 
ly new  conditions  in  excess  of  a  satisfactory  remunerative 
demand  in  the  world's  markets.  And,  apart  from  this,  it  is 
now  well  understood  that  the  aggregate  movement  and  ex- 
change of  goods  is  little  if  any  less  in  times  of  the  so-called 
"  depression  of  trade  "  than  in  times  of  admitted  prosperity. 
Again,  if  depression  of  business  does  not  signify  less  busi- 
ness, it  can  only  signify  less  profits.  In  fact,  a  reduction  of 
profits  is  the  necessary  consequence  of  falling  prices,  since 
all  the  calculations,  engagements,  and  contracts  of  the  em- 
ploying classes,  including  wages,  are  based  upon  the  expec- 
tation that  the  prices  of  their  products  will  remain  substan- 
tially unchanged,  or  no  worse  than  before.  If  there  is  a 
progressive  fall  of  prices  without  a  corresponding  fall  of 
wages,  profits  must  fall  progressively,  and  interest  also,  since 
the  rate  of  interest  is  governed  by  the  profits  which  can  be 
made  from  the  use  of  capital.  Now  this  is  exactly  what  has 
happened  in  recent  years.  Profits  and  prices  of  commodi- 
ties have  fallen,  but  wages  have  not  fallen,  except  in  a  few 
special  departments.  Consequently  the  purchasing  power 
of  wages  has  risen,  and  this  has  given  to  the  wage-earning 
class  a  greater  command  over  the  necessaries  and  comforts 
of  life,  and  the  purchases  of  all  this  great  class  have  supple- 
mented any  forced  economizing  of  the  employing  and  well- 
to-do  classes.  "  The  latter  are  the  ones  who  make  the  most 
noise  in  the  newspapers,  and  whose  frequent  bankruptcies 


FAILURE  OP  CERTAIN  ECONOMIC   INQUIRIES.      87 

most  fill  the  public  eye.  But  they  are  not  those  whose  con- 
sumption of  commodities  most  swells  the  tonnage  of  the 
railways  and  steamships.  They  occupy  the  first  cabin,  and 
their  names  are  the  only  ones  printed  in  the  passenger  lists, 
but  the  steerage  carries  more  consumers  of  wheat,  sugar,  and 
pork  than  all  the  cabins  together." 

The  popular  sentiment  which  has  instinctively  attributed 
the  remarkable  disturbance  of  trade  within  recent  years  to 
the  more  remarkable  changes  which  have  taken  place  con- 
currently in  the  methods  of  production  and  distribution  has, 
therefore,  not  been  mistaken.  The  almost  instinctive  efforts 
of  producers  everywhere  to  arrest  what  they  consider  "  bad 
trade  "  by  partially  or  wholly  interrupting  production  has 
not  been  inexpedient ;  and  the  use  of  the  word  "  over-pro- 
duction," stripped  of  its  looseness  of  expression,  and  in  the 
sense  as  defined  by  the  British  Commission  (and  as  hereto- 
fore shown),  is  not  inappropriate  in  discussing  the  economic 
phenomena  under  consideration.  It  would  also  seem  as  if 
much  of  the  bewilderment  that  is  still  attendant  upon  this 
subject,  and  the  secret  of  the  fruitlessness  of  most  of  the 
elaborate  inquiries  that  have  been  instituted  concerning  it, 
have  been  due  mainly  to  an  inability  to  distinguish  clearly 
between  a  causation  that  is  primary,  all-sufficient,  and  which 
has  acted  in  the  nature  of  unity,  and  causes  which  are  in  the 
nature  of  sequences  or  derivatives.  An  illustration  of  this 
is  to  be  found  in  the  tendency  of  English  writers  and  in- 
vestigators to  consider  the  immense  losses  which  British 
farming  capital  has  experienced  since  1873,  as  alone  suffi- 
cient to  account  for  all  the  disturbances  to  which  trade  and 
industry  in  the  United  Kingdom  have  been  subjected  dur- 
ing the  same  period.  That  such  losses  have  been  extensive 
and  disastrous  without  precedent,  is  not  to  be  questioned. 
Sir  James  Caird  estimates  this  loss  in  the  purchasing  power 
of  the  classes  engaged  in  or  connected  with  British  agricult- 
ure, for  the  single  year  1885,  as  having  amounted  to  £42,- 
800,000  ($214,000,000) ;  and  as  the  losses  for  several  preced- 


88  RECENT  ECONOMIC  CHANGES. 

ing  years  are  believed  to  have  been  equal  or  even  greater 
than  this,  an  estimate  of  a  thousand  million  dollars  decline 
in  the  value  of  British  farming  capital  since  1880,  from 
depreciation  of  land-values,  rentals,  and  prices  for  stock 
and  cereals,  is  probably  an  under  rather  than  an  over-esti- 
mate. 

Wheat-growing,  which  was  formerly  profitable  in  Great 
Britain,  is  reported  as  not  having  been  remunerative  to  the 
British  farmer  since  1874;  a  fact  that  finds  eloquent  ex- 
pression in  the  acknowledged  reduction  in  British  wheat 
acreage  from  about  4,000,000  acres  (3,981,000)  in  1869  to 
2,317,324  acres  in  1887,  or  more  than  40  per  cent.  And  as 
the  English  farmers  have  decreased  their  production  of 
cereals  by  reason  of  the  small  amount  of  profit  accruing  from 
their  labor,  the  English  agricultural  laborer  has  from  ne- 
cessity been  compelled  to  seek  other  employments,  or  emi- 
grate to  other  countries. 

[According  to  a  recent  report  of  Major  Cragie  to  the  British 
Farmer's  Club,  the  wages  of  farm  laborers  in  England  after  1860  ad- 
vanced on  the  average  thirty  per  cent ;  but  since  1881  the  average  de- 
cline in  wages  "  over  the  farmed  surface  of  England  "  has  been  at  least 
fourteen  per  cent ;  and  in  some  sections  of  the  country  the  whole  of 
the  rise  in  the  mean  wage  of  ordinary  agricultural  labors  since  1860 
has  entirely  disappeared.  The  decline  in  the  rents  of  farm  lands  in 
England  in  recent  years  has  been  estimated  by  the  London  "  Econo- 
mist," on  the  authority  of  Mr.  Clare  Read,  as  not  less  than  thirty  per 
cent,  or  10s.  per  acre  on  the  wheat  area — about  $8,700,000  yearly. 
These  results  may,  and  probably  do,  furnish  an  explanation  of  the  fact 
that  the  increase  of  wheat  acreage  in  Great  Britain  in  1888  as  com- 
pared with  1887  was  280,708  acres,  or  11-8  per  cent.] 

That  the  agricultural  populations  of  the  interior  states  of 
Europe,  which  have  hitherto  been  protected  in  a  degree  by 
the  barrier  of  distance  against  the  tremendous  cheapening 
of  transportation,  are  also  at  last  feeling  the  full  effects  of 
its  influence,  is  shown  by  the  statement  (United  States  Con- 
sular Reports,  1886)  that  farming  land  in  Germany,  remote 


DECLINE  OF  BRITISH  AGRICULTURE.  89 

from  large  cities,  where  the  demand  for  milk  and  other 
perishable  products  is  small,  can  now  be  purchased  for  fifty 
per  cent  of  the  prices  which  prevailed  at  the  close  of  the 
Franco-German  War  in  1870-'71.  And  yet  such  startling 
results,  in  the  place  of  being  prime  factors  in  occasioning  a 
depression  of  British  trade  and  industry,  are  really  four  re- 
moves from  the  original  causes,  which  may  be  enumerated 
in  order  as  follows :  First,  the  occupation  and  utilization  of 
new  and  immense  areas  of  cheap  and  fertile  wheat-growing 
land  in  the  United  States,  Canada  (Manitoba),  Australia, 
and  the  Argentine  Kepublic.  Second,  the  invention  and  ap- 
plication of  machinery  for  facilitating  and  cheapening  the 
production  and  harvesting  of  crops,  and  which  on  the  wheat- 
fields^of^Dakota  (as  before  pointed  out)  have  made  the  labor  \  i  ,. 
of  every  agriculturist  equivalent  to  the  annual  production  of  /  /*  •  * 
5,500  bushels  of  wheat.  Third,  the  extension  of  the  system 
of  transportation  on  land  through  the  railroad,  and  on  sea 
through  the  steamship,  in  default  of  which  the  appropria- 
tion of  new  land  and  the  invention  and  application  of 
new  agricultural  machinery  would  have  availed  but  little. 
Fourth,  the  discovery  of  Bessemer,  and  the  invention  of 
the  compound  (steamship)  engine,  without  which  trans- 
portation could  not  have  cheapened  to  the  degree  necessary 
to  effect  the  present  extent  of  distribution.  Now,  from 
the  conjoined  result  of  all  these  different  agencies  has  come 
a  reduction  in  the  world's  price  of  wheat  to  an  extent  suf- 
ficient to  make  its  growing  unprofitable  on  lands  taken  at 
high  rents,  and  under  unfavorable  climatic  conditions ;  and 
legislation  is  powerless  to  make  it  otherwise.  In  short,  the 
whole  secret  of  the  recent  immense  losses  of  the  British 
and  to  a  lesser  extent  also  of  the  Continental  agriculturist, 
and  the  depression  of  British  trade  and  industry,  so  far 
as  it  has  been  contingent  on  such  losses,  stands  re- 
vealed in  the  simple  statement  that  American  wheat  sold 
for  export  at  the  principal  shipping  ports  of  the  United 
States  in  1885  for  56  cents  less  per  bushel  than  in 


90 


RECENT  ECONOMIC  CHANGES. 


1874,  32  cents  less  than  in  1882,  and  20  cents  less  than  in 
1884* 

"  I  have  calculated  that  the  produce  of  five  acres  of 
wheat  can  be  brought  from  Chicago  to  Liverpool  at  less  than 
the  cost  of  manuring  one  acre  for  wheat  in  England." — Tes- 
timony of  W.  J.  HARRIS,  a  leading  farmer  in  Devonshire, 
England,  before  the  British  Commission,  1886. 

*  The  average  value  of  the  wheat  exported  from  the  United  States  in  1885, 
according  to  the  tables  of  the  United  States  Bureau  of  Statistics,  was  86  cents 
per  bushel  at  the  shipping  ports.  This  was  a  decline  of  20  cents  from  1884, 
26i  cents  from  1883,  32  cents  from  1882,  56  cents  from  1874,  and  61  cents  from 
1871. 

The  export  value  of  corn  was  54  cents  in  1885,  showing  a  decline  of  7  cents 
from  1884, 14  cents  from  1883, 12  cents  from  1882,  30  cents  from  1875,  and  15 
cents  from  1872. 

The  export  value  of  oats  was  37  cents  in  1885,  showing  a  decline  of  2  cents 
from  1884, 13  cents  from  1883,  7  cents  from  1882,  20  cents  from  1875,  and  14 
cents  from  1871 . 

The  export  price  of  lard  was  7  cents  in  1885,  showing  a  decline  of  2  cents 
from  1884,  4  cents  from  1883,  6  cents  from  1875,  3  cents  from  1872,  and  9  cents 
from  1870. 

How  closely  the  decline  in  recent  years  in  the  export  prices  of  American 
cereals  has  been  followed  by  corresponding  reductions  in  the  prices  of  cereals 
in  the  markets  of  Great  Britain  is  exhibited  by  the  following  table  (published 
in  the  British  "  Farmer's  Almanac  "  for  1886),  showing  the  average  prices  per 
quarter  of  wheat,  barley,  and  oats,  in  Great  Britain  for  two  periods  of  ten 
years,  commencing  with  1865,  with  a  separate  estimate  for  1885 : 


CEREALS. 

Price  per  quar- 
ter.   Average  for 
the  ten  years, 
1866-1875. 

Price  per  quar- 
ter.   Average  for 
the  ten  years, 
1876-1885. 

Average  price  per 
quarter  for  1885. 

Wheat  

»,        ff. 

54    ?i 

s.       d. 
43     9f 

n.       d. 
32     10 

39    2 

36     5 

30    1 

Oats  

25    10$ 

22    8J 

20    7 

Similar  tables  given  by  the  same  authority  show  the  gross  value  per  annum 
of  the  product  of  wheat,  barley,  oats,  beef,  mutton,  and  wool,  in  Great  Britain, 
to  have  been  £35,000,000  ($175,000,000)  less  in  1885  than  were  the  mean  re- 
turns for  the  ten  years  1866-1875.  According  also  to  data  given  in  the  returns 
of  the  British  Registrar- General,  the  average  prices  of  beef  by  the  carcass  in 
the  London  market  were  £58  5s.  Id.  per  ton  during  the  ten  years  from  1866- 
1875,  £57  5s.  8d.  for  1876-1885,  and  £49  17s.  &d.  for  the  year  1885. 


NEW  RELATIONS  OF  LABOR  AND  CAPITAL.        91 

Indian  corn  can  be  successfully  and  has  been  extensively 
raised  in  Italy.  But  Indian  corn  grown  in  the  valley  of  the 
Mississippi,  a  thousand  miles  from  the  seaboard,  has  been 
transported  in  recent  years  to  Italy  and  sold  in  her  markets 
at  a  lower  cost  than  the  corn  of  Lombardy  and  Venetia, 
where  the  wages  of  the  agriculturist  are  not  one  third  of 
the  wages  paid  in  the  United  States  for  corresponding  labor. 
And  one  not  surprising  sequel  of  this  is  that  77,000  Italian 
laborers  emigrated  to  the  United  States  in  1885. 

Now,  what  has  happened  in  the  case  of  wheat  and  corn 
has  happened  also,  in  a  greater  or  less  degree,  as  respects 
meats  and  almost  all  other  food  products ;  increased  sup- 
plies having  occasioned  reduction  of  prices,  and  reduction 
of  prices,  in  turn,  ruinous  losses  to  invested  capital  and  revo- 
lutionary disturbances  in  old  methods  of  doing  business. 
The  Bessemer  rail,  the  modern  steamship,  and  the  Suez 
Canal  have  brought  the  wheat-fields  of  Dakota  and  India, 
and  the  grazing-lands  of  Texas,  Colorado,  Australia,  and 
the  Argentine  Republic,  nearer  to  the  factory  operatives  in 
Manchester,  England,  than  the  farms  of  Illinois  were  before 
the  war  to  the  spindles  and  looms  of  New  England. 

CHANGES  IN  THE  RELATIONS  OF  LABOR  AND  CAPI- 
TAL.— Consider  next  how  potent  for  economic  disturbance 
have  been  the  changes  in  recent  years  in  the  relations  of 
labor  and  capital,  and  how  clearly  and  unmistakably  these 
changes  are  consequents  or  derivatives  from  a  more  potent 
and  antecedent  agency. 

Machinery  is  now  recognized  as  essential  to  cheap  pro- 
duction. Nobody  can  produce  effectively  and  economically 
without  it,  and  what  was  formerly  known  as  domestic  manu- 
facture is  now  almost  obsolete.  But  machinery  is  one  of 
the  most  expensive  of  all  products,  and  its  extensive  pur- 
chase and  use  require  an  amount  of  capital  far  beyond  the 
capacity  of  the  ordinary  individual  to  furnish.  There  are 
very  few  men  in  the  world  possessed  of  an  amount  of  wealth 
sufficient  to  individually  construct  and  own  an  extensive 


92  RECENT  ECONOMIC  CHANGES. 

line  of  railway  or  telegraph,  a  first-class  steamship,  or  a  great 
factory.  It  is  also  to  be  remembered  that  for  carrying  on 
production  by  the  most  modern  and  effective  methods  large 
capital  is  needed,  not  only  for  machinery,  but  also  for  the 
purchasing  and  carrying  of  extensive  stocks  of  crude  mate- 
rial and  finished  products. 

Sugar  can  now  be,  and  generally  is,  refined  at  a  profit  of 
an  eighth  of  a  cent  a  pound,  and  sometimes  as  low  as  a  six- 
teenth ;  or,  in  other  words,  from  eight  to  sixteen  pounds  of 
raw  sugar  must  now  be  treated  in  refining  in  order  to  make 
a  cent ;  from  eight  hundred  to  sixteen  hundred  pounds  to 
make  a  dollar ;  from  eighty  thousand  to  one  hundred  and 
sixty  thousand  pounds  to  make  a  hundred  dollars,  and  so  on. 
The  mere  capital  requisite  for  providing  and  carrying  the 
raw  material  necessary  for  the  successful  prosecution  of  this 
business,  apart  from  all  other  conditions,  places  it,  there- 
fore, of  necessity  beyond  the  reach  of  any  ordinary  capital- 
ist or  producer.  It  has  been  before  stated  that,  in  the  manu- 
facture of  jewelry  by  machinery,  one  boy  can  make  up  nine 
thousand  sleeve-buttons  per  day ;  four  girls  also,  working 
by  modern  methods,  can  put  together  in  the  same  time  eight 
thousand  collar-buttons.  But  to  run  an  establishment  with 
such  facilities  the  manufacturer  must  keep  constantly  in 
stock  thirty  thousand  dollars'  worth  of  cut  ornamental 
stones,  and  a  stock  of  cuff-buttons  that  represents  nine 
thousand  different  designs  and  patterns.  Hence  from  such 
conditions  have  grown  up  great  corporations  or  stock  com- 
panies, which  are  only  forms  of  associated  capital  organized 
for  effective  use  and  protection.  They  are  regarded  to  some 
extent  as  evils  ;  but  they  are  necessary,  as  there  is  apparently 
no  other  way  in  which  the  work  of  production  and  distribu- 
tion, in  accordance  with  the  requirements  of  the  age,  can 
be  prosecuted.  The  rapidity,  however,  with  which  such 
combinations  of  capital  are  organizing  for  the  purpose  of 
promoting  industrial  and  commercial  undertakings  on  a 
scale  heretofore  wholly  unprecedented,  and  the  tendency 


INDIVIDUALISM  IN  PRODUCTION.  93 

they  have  to  crystallize  into  something  far  more  complex 
than  what  has  been  familiar  to  the  public  as  corporations, 
with  the  impressive  names  of  syndicates,  trusts,  etc.,  also 
constitute  one  of  the  remarkable  features  of  modern  busi- 
ness methods.  It  must  also  be  admitted  that  the  whole 
tendency  of  recent  economic  development  is  in  the  direc- 
tion of  limiting  the  area  within  which  the  influence  of  com- 
petition is  effective. 

And  when  once  a  great  association  of  capital  has  been 
effected,  it  becomes  necessary  to  have  a  master-mind  to  man- 
age it — a  man  who  is  competent  to  use  and  direct  other  men, 
who  is  fertile  in  expedient  and  quick  to  note  and  profit  by 
any  improvements  in  methods  of  production  and  variations 
in  prices.  Such  a  man  is  a  general  of  industry,  and  corre- 
sponds in  position  and  functions  to  the  general  of  an  army. 

What,  as  a  consequence,  has  happened  to  the  employes? 
Coincident  with  and  as  a  result  of  this  change  in  the  meth- 
ods of  production,  the  modern  manufacturing  system  has 
been  brought  into  a  condition  analogous  to  that  of  a  mili- 
tary organization,  in  which  the  individual  no  longer  works 
as  independently  as  formerly,  but  as  a  private  in  the  ranks, 
obeying  orders,  keeping  step,  as  it  were,  to  the  tap  of  the 
drum,  and  having  nothing  to  say  as  to  the  plan  of  his  work, 
of  its  final  completion,  or  of  its  ultimate  use  and  distribution. 
In  short,  the  people  who  work  in  the  modern  factory  are,  as 
a  rule,  taught  to  do  one  thing — to  perform  one  and  gener- 
ally a  simple  operation  ;  and  when  there  is  no  more  of  that 
kind  of  work  to  do,  they  are  in  a  measure  helpless.  The  re- 
sult has  been  that  the  individualism  or  independence  of  the 
producer  in  manufacturing  has  been  in  a  great  degree  de- 
stroyed, and  with  it  has  also  in  a  great  degree  been  destroyed 
the  pride  which  the  workman  formerly  took  in  his  work — 
that  fertility  of  resource  which  formerly  was  a  special  char- 
acteristic of  American  workmen,  and  that  element  of  skill 
that  comes  from  long  and  varied  practice  and  reflection  and 
responsibility.  Not  many  years  ago  every  shoemaker  was  or 


94  RECENT  ECONOMIC  CHANGES. 

could  be  his  own  employer.  The  boots  and  shoes  passed  di- 
rectly from  an  individual  producer  to  the  consumer.  Now 
this  condition  of  things  has  passed  away.  Boots  and  shoes 
are  made  in  large  factories ;  and  machinery  has  been  so  util- 
ized, and  the  division  of  labor  in  connection  with  it  has  been 
carried  to  such  an  extent,  that  the  process  of  making  a  shoe 
is  said  to  be  divided  into  sixty-four  parts,  or  the  shoemaker 
of  to-day  is  only  the  sixty-fourth  part  of  what  a  shoemaker 
once  was.*  It  is  also  asserted  that  "  the  constant  employ- 
ment at  one  sixty-fourth  part  of  a  shoe  not  only  offers  no 
encouragement  to  mental  activity,  but  dulls  by  its  monotony 
the  brain  of  the  employe  to  such  an  extent  that  the  power 
to  think  and  reason  is  almost  lost."  f 

*  The  following  is  a  reported  enumeration  of  the  specialties  or  distinct 
branches  of  shoemaking  at  which  men,  women,  and  children  are  kept  con- 
stantly at  work  in  the  most  perfect  of  the  modern  shoe-factories,  no  appren- 
tices being  needed  or  taken  in  such  establishments :  "  Binders,  blockcrs,  boot- 
liners,  beaters-out,  boot-turners,  bottomers,  buffers,  burnishers,  channelers, 
counter-makers,  crimpers,  cutters,  dressers,  edge-setters,  eyeleters,  finishers, 
fitters,  heelers,  lasters,  levelers,  machine-peggers,  McKay  stitchers,  nailers, 
packers,  parters,  peggers,  pressers,  rosette-makers,  siders,  sandpaperers,  skin- 
ners, stitchers,  stringers,  treers,  trimmers,  welters,  buttonhole-makers,  clamp- 
ers, deckers,  closers,  corders,  embossers,  gluers,  inner-sole-makers,  lacers, 
leather-assorters,  riveters,  rollers,  seam-rubbers,  shank-pressers,  shavers,  slip- 
per-liners, sole-leather-cutters,  sole-quilters,  stampers,  stiffeners,  stock-fitters, 
strippers,  taggers,  tipmakers,  tuiners,  vampers,.etc." 

t  The  position  taken  by  Prince  Krapotkin,  who  represents  to  some  extent 
the  extreme  socialistic  movement  in  Europe,  is,  "  that  the  division  and  sub- 
division of  functions  have  been  pushed  so  far  as  to  divide  humanity  into  castes 
almost  as  firmly  established  as  those  of  old  India.  First,  the  broad  division 
into  producers  and  consumers  :  little-consuming  producers  on  the  one  hand, 
little-producing  consumers  on  the  other  hand.  Then,  amid  the  former,  a 
series  of  further  subdivisions — the  manual  worker  and  the  intellectual  worker, 
sharply  separated;  and  agricultural  laborers  and  workers  in  manufactures. 
Amid  little-producing  consumers  are  numberless  minute  subdivisions,  the 
modern  ideal  of  a  workman  being  a  man  or  a  woman,  a  boy  or  a  girl,  without 
the  knowledge  of  any  handicraft,  having  no  conception  whatever  of  the  indus- 
try in  which  he  or  she  is  employed,  and  only  capable  of  making  all  day  long 
and  for  a  whole  life  the  same  infinitesimal  part  of  something — from  the  age  of 
thirteen  to  that  of  sixty  pushing  the  coal-cart  at  a  given  spot  of  the  mine,  or 
making  the  spring  of  a  pen-knife,  or  the  eighteenth  part  of  a  pin.  The  work- 
ing classes  have  become,"  he  say.-!,  "  mere  servants  to  some  machine  of  a  given 


EMPLOYMENT  OF  CHILD  LABOR.  95 

As  the  division  of  labor  in  manufacturing — more  espe- 
cially in  the  case  of  textiles — is  increased,  the  tendency  is 
to  supplement  the  employment  of  men  with  the  labor  of 
women  and  children.  The  whole  number  of  employes  in 
the  cotton-mills  of  the  United  States,  according  to  the  cen- 
sus of  1880,  was  172,544 ;  of  this  number,  59,685  were  men, 
and  112,859  women  and  children.  In  Massachusetts,  out  of 
61,246  employes  in  the  cotton-mills,  22,180  are  males,  31,496 
women,  and  7,570  children.  In  the  latter  State  certain 
manufacturing  towns,  owing  to  the  disparity  in  the  numbers 
of  men  and  women  employed,  and  in  favor  of  the  latter,  are 
coming  to  be  known  by  the  appellation  of  " she-towns" * 
During  recent  years  the  increase  in  the  employment  of  child- 
labor  in  Germany  has  been  so  noticeable,  that  the  factory 
inspectors  of  Saxony  in  their  official  report  for  1888  have 
suggested  that  such  labor  be  altogether  forbidden  by  the 
State,  and  that  the  hours  during  which  youths  between  the 
ages  of  fourteen  to  sixteen  may  be  legally  employed  in  fac- 
tories should  be  limited  to  six. 

description ;  mere  flesh-and-bone  parts  of  some  immense  machinery,  having 
no  idea  about  how  and  why  the  machinery  is  performing  its  rhythmical  move- 
ments. Skilled  artisanship  is  swept  away  as  a  survival  of  a  past  which  is  con- 
demned to  disappear.  For  the  artist  who  formerly  found  aesthetic  enjoyment 
in  the  work  of  his  hands  is  substituted  the  human  slave  of  an  iron  slave," 
etc.,  etc. 

*  "  The  tendency  of  late  years  is  toward  the  employment  of  child-labor. 
"We  see  men  frequently  thrown  out  of  employment,  owing  to  the  spinning- 
mule  being  displaced  by  the  ring-frame ;  or  children  spinning  yam,  which 
men  used  to  spin.  In  the  weave-shops,  girls  and  women  are  preferable  to 
men,  so  that  we  may  reasonably  expect  that,  in  the  not  very  distant  future,  all 
the  cotton-manufacturing  districts  will  be  classed  in  the  category  of  '  she- 
towns.'  But  people  will  naturally  say,  What  will  become  of  the  men  ?  This 
is  a  question  which  it  behooves  manufacturers  to  take  seriously  into  considera- 
tion, for  men  will  not  stay  in  any  town  or  city  where  only  their  wives  and 
children  can  be  given  employment.  Therefore,  a  pause  at  the  present  time 
might  be  of  untold  value  in  the  future ;  for,  just  as  sure  as  the  world  goes 
round,  women  and  children  will  seek  fresh  pastures,  where  work  can  be  found 
for  the  husband  and  father,  in  preference  to  remaining  in  places  where  he  has 
to  play  the  part  of  the  '  old  woman,'  while  they  go  to  work  to  earn  the  means 
of  subsistence." — WADE'B  Fihtr  and  Fabric. 


96  RECENT  ECONOMIC  CHANGES. 

Another  exceedingly  interesting  and  developing  feature 
of  the  new  situation  is  that,  as  machinery  has  destroyed  the 
handicrafts,  and  associated  capital  has  placed  individual 
capital  at  a  disadvantage,  so  machinery  and  associated  capi- 
tal in  turn,  guided  by  the  same  common  influences,  now  war 
upon  machinery  and  other  associated  capital.  Thus  the 
now  well-ascertained  and  accepted  fact,  based  on  long  expe- 
rience, that  power  is  most  economically  applied  when  ap- 
plied on  the  largest  possible  scale,  is  rapidly  and  inevitably 
leading  to  the  concentration  of  manufacturing  in  the  largest 
establishments,  and  the  gradual  extinction  of  those  which 
are  small.  Such  also  has  already  been,  and  such  will  con- 
tinue to  be,  the  outcome  of  railroad,  telegraph,  and  steam- 
ship development  and  experience ;  and  another  quarter  of  a 
century  will  not  unlikely  see  all  of  the  numerous  companies 
that  at  present  make  up  the  vast  railroad  system  of  the 
United  States  consolidated,  for  sound  economic  reasons, 
under  a  comparatively  few  organizations  or  companies.*  In 

*  "  There  are  in  England  eleven  great  companies,  but  these  were  formed 
of  two  hundred  and  sixty-two  companies,  while  the  six  great  companies  of 
France  have  absorbed  forty-eight  companies.  When  the  New  York  Central 
Railway  was  formed  in  1853,  it  consisted  of  a  union  of  eleven  railways.  It 
takes  twenty-five  pages  in  '  Poor's  Manual  of  Eailroads  for  1885 '  merely  to 
give  a  list  of  railways  in  the  United  States  which  have  been  merged  in  other 
lines.  This  shows  in  marked  manner  the  tendency  toward  consolidation. 
There  is  no  exception.  It  is  a  phenomenon  common  to  all  countries. 

"  By  means  of  combination  and  concentration  of  railway  property  the  rail- 
way business  of  the  country  can  be  conducted  most  effectively.  It  is  an  im- 
provement in  economic  methods  of  large  proportions.  The  experience  of  the 
world  has  demonstrated  this  so  conclusively  that  it  admits  of  no  doubt,  and  a 
very  little  reflection  on  the  nature  of  the  economic  functions  of  the  railway 
will  render  it  clear  to  the  reader.  When  the  general  public  and  the  press 
resist  this  tendency,  or  cry  out  in  childish  indignation  because  Mr.  Vanderbilt 
bought  the  West  Shore  Railway  in  the  interest  of  the  New  York  Central  and 
Hudson  River  Railway,  they  are  more  foolish  than  laboring-men  who  resist 
the  introduction  of  new  and  improved  machinery.  The  latter  have  at  least 
the  excuse  that  changed  methods  of  production  often  occasion  the  bitterest 
distress,  and  injure  permanently  some  few  laboring  men ;  and  it  is  hard  to 
appreciate  a  permanent  advantage  which  must  be  acquired  by  severe  present 
suffering.  The  impulse  to  such  great  economies  as  can  be  secured  by  com- 


DESTRUCTION  OF  SMALL  INDUSTRIES.  97 

this  respect  the  existing  situation  in  Great  Britain  (which 
corresponds  to  that  in  all  other  countries)  has  thus  been 
represented : 

"  Trade  after  trade  is  monopolized,  not  necessarily  by  large  capi- 
talists, but  by  great  capitals.  In  every  trade  the  standard  of  necessary 
size,  the  minimum  establishment  that  can  hold  its  own  in  competition, 
is  constantly  and  rapidly  raised.  The  little  men  are  ground  out,  and 
the  littleness  that  dooms  men  to  destruction  waxes  year  by  year.  Of 
the  (British)  cotton-mills  of  the  last  century,  a  few  here  and  there  are 
standing,  saved  by  local  or  other  accidents,  while  their  rivals  have 
either  grown  to  gigantic  size  or  fallen  into  ruin.  The  survivors,  with 
steam  substituted  for  water-power,  with  machinery  twice  or  thrice 
renewed,  are  worked  while  they  pay  one  half  or  one  fourth  per  cent 
on  their  cost.  The  case  of  other  textile  manufactures  is  the  same 
or  stronger  still.  Steel  and  iron  are  yet  more  completely  the  mo- 
nopoly of  gigantic  plants.  The  chemical  trade  was  for  a  long  time 
open  to  men  of  very  moderate  means.  Recent  inventions  threaten 
to  turn  the  plant  that  has  cost  millions  to  waste  brick  and  old 
lead.  Already  nothing  but  a  trade  agreement,  temporary  in  its  na- 
ture, has  prevented  the  closing  of  half  the  (chemical)  factories  of  St. 
Helen's  and  Widnes,  and  the  utter  ruin  of  all  the  smaller  owners. 
Every  year  the  same  thing  happens  in  one  or  another  of  our  minor 
industries." 

"  The  president  of  one  of  the  largest  cotton  corporations  in  New 
England  in  a  recent  annual  report  stated  that '  competition  is  so  sharp 
that  the  profits  of  a  mill  are  generally  only  the  savings  made  on  the 
general  expenses  caused  by  increased  production,  so  that  a  mill  with  a 
small  production  finds  it  impossible  to  live.  Unless  the  smaller  cot- 
ton-mills have  a  monopoly  of  some  fancy  business,  they  have  all  gone 
under  or  must  fail.' " 

bination  is  BO  strong  as  to  be  irresistible.  It  is  one  of  those  forces  which  over- 
whelm the  man  who  puts  himself  against  them,  though  they  may  be  guided 
and  directed,  will  one  but  put  one's  self  in  the  stream  and  move  with  it." — 
The  Reform  of  Railway  Abuses.  ELT. 

"  The  railroads  of  the  country  are  rapidly  moving  toward  some  great  sys- 
tem of  consolidation.  .  .  .  The  movement  is  to-day  going  forward  more  rap- 
idly— much  more  rapidly— under  the  artificial  stimulus  given  to  it  by  the  Inter- 
State  Commerce  Act  than  ever  before.  The  next  move  will  be  in  the  direc- 
tion of  railroad  systems  of  twenty  thousand  miles,  each  under  one  common 
management."— Speech  of  MB.  CHARLES  FRANCIS  ADAMS,  President  Union 
Pacific,  before  the  Commercial  Club,  Boston,  December,  1888. 


98  RECENT  ECONOMIC  CHANGES. 

Such  changes  in  the  direction  of  the  concentration  of 
production  by  machinery  in  large  establishments  are,  more- 
over, in  a  certain  and  large  sense,  not  voluntary  on  the  part 
of  the  possessors  and  controllers  of  capital,  but  necessary  or 
even  compulsory.  If  an  eighth  or  a  sixteenth  of  a  cent  a 
pound  is  all  the  profit  that  competition  and  modern  im- 
provements will  permit  in  the  business  of  refining  sugar, 
such  business  has  got  to  be  conducted  on  a  large  scale  to  ad- 
mit of  the  realization  of  any  profit.  An  establishment  fitted 
up  with  all  modern  improvements,  and  refining  the  abso- 
lutely large  but  comparatively  small  quantity  of  a  million 
pounds  per  annum,  could  realize,  at  a  sixteenth  of  a  cent  a 
pound  profit  on  its  work,  but  $625.  Accordingly,  the  suc- 
cessful refiner  of  sugars  of  to-day,  in  place  of  being  as  for- 
merly a  manufacturer  exclusively,  must  now,  as  a  condition 
of  full  success,  be  his  own  importer,  do  his  own  lighterage, 
own  his  own  wharfs  and  warehouses,  make  his  own  barrels 
and  boxes,  prepare  his  own  bone-black,  and  ever  be  ready  to 
discard  and  replace  his  expensive  machinery  with  every  new 
improvement.  But  to  do  all  this  successfully  requires  not 
only  the  command  of  large  capital,  but  of  business  qualifica- 
tions of  the  very  highest  order — two  conditions  that  but 
comparatively  few  can  command.  It  is  not,  therefore,  to  be 
wondered  at  that,  under  the  advent  of  these  new  conditions, 
one  half  of  the  sugar-refineries  that  were  in  operation  in  the 
seaboard  cities  of  the  United  States  in  1875  have  since  failed 
or  discontinued  operations. 

In  the  great  beef  slaughtering  and  packing  establish- 
ments at  Chicago,  which  slaughter  a  thousand  head  of  cattle 
and  upward  in  a  day,  economies  are  effected  which  are  not 
possible  when  this  industry  is  carried  on,  as  usual,  upon  a  very 
small  scale.  Every  part  of  the  animal — hide,  horns,  hoofs, 
bones,  blood,  and  hair — which  in  the  hands  of  the  ordinary 
butcher  are  of  little  value  or  a  dead  loss,  are  turned  to  a 
profit  by  the  Chicago  packers  in  the  manufacture  of  glue, 
bone-dust,  fertilizers,  etc. ;  and  accordingly  the  great  pack- 


ECONOMY  OF  LARGE  PRODUCTION.  99 

ers  can  afford  to  and  do  pay  more  for  cattle  than  would 
otherwise  be  possible — an  advance  estimated  by  the  best 
authorities  at  two  dollars  a  head.  Nor  does  this  increased 
price  which  Western  stock-growers  receive  come  out  of  the 
consumer  of  beef.  It  is  made  possible  only  by  converting 
the  portions  of  an  ox  that  would  otherwise  be  sheer  waste 
into  products  of  value. 

The  following  statements  have  recently  been  made  in 
California,  on  what  is  claimed  to  be  good  authority  ("  Over- 
land Monthly  "),  of  the  comparative  cost  of  growing  wheat 
in  that  State  on  ranches,  or  farms  of  different  sizes.  On 
ranches  of  1,000  acres,  the  average  cost  is  reported  at  92£ 
cents  per  100  pounds ;  on  2,000  acres,  85  cents ;  on  6,000 
acres,  75  cents ;  on  15,000  acres,  60  cents ;  on  30,000  acres, 
50  cents ;  and  on  50,000  acres,  40  cents.  Accepting  these 
estimates  as  correct,  it  follows  that  the  inducements  to  grow 
wheat  in  California  by  agriculturists  with  limited  capital 
and  on  a  small  scale  are  anything  but  encouraging. 

The  following  are  other  illustrations  pertinent  to  this 
subject :  "  It  is  a  characteristic  and  noteworthy  feature  of 
banking  in  Germany,"  says  the  London  "  Statist,"  "  that  the 
bulk  of  the  business  is  gradually  shifting  from  the  small 
bankers,  who  used  to  do  a  thriving  business,  to  the  great 
banking  companies,  leaving  quite  a  number  of  small  cus- 
tomers almost  without  any  chance  to  prosper  in  legitimate 
operations — concentration  of  capital  and  business  in  the 
hands  of  a  limited  number  of  powerful  customers  being  the 
rule  of  the  day." 

The  tendency  to  discontinue  the  building  and  use  of 
small  vessels  for  ocean  transportation,  and  the  inability  of 
such  vessels  to  compete  with  vessels  of  larger  tonnage,  is 
shown  by  the  statement  that  while  a  steamer  of  from  200 
to  300  tons  requires  one  sailor  for  every  19-8  tons,  a  steamer 
of  from  800  to  1,000  tons  requires  but  one  sailor  for  every 
41-5  tons.  In  like  manner,  while  a  sailing-vessel  of  from 
200  to  300  tons  requires  one  sailor  for  every  28-9  tons,  a 


100  RECENT  ECONOMIC  CHANGES. 

sailing-vessel  of  five  times  the  size,  or  from  1,000  to  1,600 
tons,  requires  but  one  sailor  for  every  60'3  tons.  And  as  it 
is  also  claimed  that  other  economies  in  the  construction  of 
the  hull  or  the  rigging,  and  in  repairing,  are  concurrent 
with  the  reduction  of  crews,  it  is  not  difficult  to  understand 
why  it  is  that  large  vessels  are  enabled  to  earn  a  percentage 
of  profit  with  rates  of  freight  which,  in  the  case  of  small 
vessels,  would  inevitably  entail  losses. 

It  was  a  matter  of  congratulation  after  the  conclusion 
of  the  American  war  in  1865,  that  the  large  plantation  sys- 
tem of  cotton-raising  would  be  broken  up,  and  a  system  of 
smaller  crops,  by  small  and  independent  farmers  or  yeo- 
manry, would  take  its  place.  Experience  has  not,  however, 
verified  this  expectation ;  but,  on  the  contrary,  has  shown 
that  it  is  doubtful  whether  any  profit  can  accrue  to  a 
cultivator  of  cotton  whose  annual  crop  is  less  than  fifty 
bales. 

"  Cotton  (at  the  South)  is  made  an  exclusive  crop,  be- 
cause it  can  be  sold  for  cash — for  an  actual  and  certain  price 
in  gold.  It  is  a  mere  trifle  to  get  eight  or  nine  cents  for  a 
pound  of  cotton,  but  for  a  bale  of  450  pounds  it  is  $40.  The 
bale  of  cotton  is  therefore  a  reward  which  the  anxious  farmer 
works  for  during  an  entire  year,  and  for  which  he  will  spend 
half  as  much  in  money  before  the  cotton  is  grown,  besides 
all  his  labor  and  time.  And  the  man  who  can  not  make 
eight  or  ten  bales  at  least  has  almost  no  object  in  life,  and 
nothing  to  live  on." — Bradstreefs  Journal. 

About  fifteen  years  ago  the  new  and  so-called  "  roller 
process  "  for  crushing  and  separating  wheat  was  discovered 
and  brought  into  use.  Its  advantages  over  the  old  method 
of  grinding  by  millstones  were  that  it  separated  the  flour 
more  perfectly  from  the  hull  or  bran  of  the  berry  of  the 
wheat,  gave  more  flour  to  a  bushel  of  wheat,  and  raised  both 
its  color  and  strength  (nutriment).  As  soon  as  these  facts 
were  demonstrated,  the  universal  adoption  of  the  roller  mills 
and  the  total  abolition  of  the  stone  mills  became  only  a 


EXPERIENCE  OF  THE  MILLING  INDUSTRY.      101 

question  of  time,  as  the  latter  could  not  compete  with  the 
former.  The  cost  of  building  mills  to  operate  by  the  roller 
process  is,  however,  much  greater  than  that  of  the  old  stone 
mills.  Formerly,  from  $25,000  to  $50,000  was  an  ample 
capital  with  which  to  engage  in  flour-milling  in  the  United 
States,  where  water-power  only  was  employed ;  but  at  the 
present  time  from  $100,000  to  $150,000  is  required  to 
go  into  the  business  upon  a  basis  with  any  promise  of  suc- 
cess, even  with  a  small  mill ;  while  the  great  mills  of  Min- 
neapolis, St.  Louis,  and  Milwaukee  cost  from  $250,000  to 
$500,000  each,  and  include  "  steam  "  as  well  as  water-power. 
The  consequence  of  requiring  so  much  more  capital  to  partici- 
pate in  the  flour  business  now  than  formerly  is  that  the 
smaller  flour-mills  in  the  United  States  are  being  crushed, 
or  forced  into  consolidation  with  the  larger  companies,  the 
latter  being  able,  from  dealing  in  such  immense  quantities, 
to  buy  their  wheat  more  economically,  obtain  lower  rates  of 
freight,  and,  by  contracting  ahead,  keep  constantly  run- 
ning.* At  the  same  time  there  is  a  tendency  to  drive  the 
milling  industry  from  points  in  the  country  to  the  larger 
cities,  and  central  grain  and  flour  markets  where  cheap 
freights  and  large  supplies  of  wheat  are  available.  As  might 
have  been  anticipated,  therefore,  the  Milwaukee  "  Directory 
of  American  Millers,"  for  1886,  shows  a  decrease  in  the 
number  of  flour-mills  in  the  United  States  for  that  year,  as 
compared  with  1884,  of  6,812,  out  of  a  total  in  the  latter 
year  of  25,079,  but  an  increase  at  the  same  time  in  capacity 
for  flour  production.  These  new  conditions  of  milling  have 
been  followed  by  a  movement  in  England  for  the  consolida- 
tion in  great  cities  of  the  flour-mills  and  bakeries  into  single 
establishments,  where  the  bread-making  of  the  whole  com- 

*  What  has  happened  in  this  business  in  the  United  States  is  true  also  of 
Great  Britain.  In  both  countries  the  new  -system  of  milling  and  the  concen- 
tration of  the  business  in  great  establishments  has  led  to  over-production, 
undue  competition,  and  minimized  profits  ;  and  in  both  countries  great  milling 
syndicates  or  trusts  have  been  formed  to  regulate  production  and  prices. 


102  RECENT  ECONOMIC  CHANGES. 

munity  may  be  done  in  immense  ovens,  under  the  most  sci- 
entific conditions,  and  at  a  material  saving  in  cost. 

The  improvements  in  recent  years  in  the  production  of 
sugar  from  the  beet,  and  the  artificial  encouragement  of  this 
industry  in  the  continental  states  of  Europe  through  the 
payment  of  large  bounties,  has  in  turn  compelled  the  large 
producers  of  cane-sugars  in  the  tropics  to  entirely  abandon 
their  old  methods  of  working,  and  reorganize  this  industry 
on  a  most  gigantic  scale  as  a  condition  of  continued  exist- 
ence. Thus,  for  example,  although  the  business  of  cane- 
sugar  production  was  commenced  more  than  three  hundred 
years  ago  on  the  island  of  Cuba,  the  grinding  of  the  cane 
by  animal  or  "  wind  "  power,  and  the  boiling  and  granulat- 
ing by  ancient,  slow,  and  wasteful  methods,  was  everywhere 
kept  up  until  within  a  very  recent  period,  as  it  still  is  by 
small  planters  in  every  tropical  country.  But  at  the  pres- 
ent time,  upon  the  great  plantations  of  Cuba  and  some  other 
countries,  the  cane  is  conveyed  from  the  fields  by  a  system 
of  railroads  to  manufacturing  centers,  which  are  really  huge 
factories,  with  all  the  characteristics  of  factory  life  about 
them,  and  with  the  former  home  or  rural  idea  connected 
with  this  industry  completely  eliminated.  In  these  facto- 
ries, where  the  first  cost  of  the  machinery  plant  often  repre- 
sents as  large  a  sum  as  $200,000  to  $250,000,  with  an  equally 
large  annual  outlay  for  labor  and  other  expenses,  all  grades 
of  sugar  from  the  "  crude "  to  the  "  partially  refined  "  are 
manufactured  at  a  cost  that  once  would  not  have  been 
deemed  possible.  In  Dakota  and  Manitoba  the  employment 
on  single  wheat  estates  of  a  hundred  reapers  and  an  aggre- 
gate of  three  hundred  laborers  for  a  season  has  been  regarded 
as  something  unprecedented  in  agricultural  industry;  but 
on  one  sugar  estate  in  Cuba — "El  Balboa" — from  fifteen 
hundred  to  two  thousand  hands,  invariably  negroes,  are 
employed,  who  work  under  severe  discipline,  in  watches  or  re- 
lays, during  the  grinding  season,  by  day  and  night,  the  same 
as  in  the  large  iron-mills  and  furnaces  of  the  United  States 


CO-OPERATION  AND  THE  LABOR  PROBLEM.     1Q3 

and  Europe.  At  the  same  time  there  are  few  village  com- 
munities where  a  like  number  of  people  experience  the  same 
care  and  surveillance.  The  male  workers  occupy  quarters 
walled  and  barricaded  from  the  women,  and  the  women 
from  the  men.  There  is  in  every  village  an  infirmary,  a 
lying-in  hospital,  a  physician,  an  apothecary,  a  chapel,  and 
priest.  At  night  and  morning  mass  is  said  in  chapel,  and 
the  crowds  are  always  large.  There  is  of  a  Sunday  less  re- 
straint, though  ceaseless  espionage  is  never  remitted.  On 
these  days  and  in  parts  of  holidays  there  is  rude  mirth, 
ruder  music,  and  much  dancing.  This  picture  is  given 
somewhat  in  detail,  because  it  illustrates  how  all-pervading 
and  tremendous  are  the  forces  that  are  modifying  society 
everywhere,  in  civilized,  partially  civilized,  and  even  barbar- 
ous countries,  conjointly  with  the  new  conditions  of  produc- 
tion and  consumption. 

The  experience  of  the  co-operative  societies  of  Great 
Britain — the  inception  and  practical  working  of  which  have 
been  hopefully  looked  upon  as  likely  to  furnish  a  solution 
of  the  labor  problem — as  recently  detailed  by  Mr.  Thomas 
Hughes  ("  Tom  Brown  "),  does  not,  moreover,  seem  likely 
to  constitute  any  exception  to  the  general  tendency  of  great 
aggregated  capital,  employed  in  production  or  distribution, 
to  remorselessly  disregard  any  sentiment  on  the  part  of  the 
individual  workman  in  respect  to  his  vocation,  and  to  crush 
out  or  supersede  all  industrial  enterprises  of  like  character 
that  ^may  be  compelled  to  work  at  relative  disadvantage  by 
reason  of  operating  upon  a  smaller  scale,  or  inability  to  em- 
ploy a  larger  aggregate  of  capital.  This  experience,  as  re- 
lated by  Mr.  Hughes  at  a  recent  congress  (1887)  of  the  co- 
operative societies  of  Great  Britain,  has  been  as  follows : 
Co-operation  in  Great  Britain,  so  long  as  it  has  confined 
itself  to  distribution — that  is,  to  the  purchase  of  commodi- 
ties at  the  lowest  rates  at  wholesale  and  without  the  inter- 
vention of  middle-men,  and  their  subsequent  sale  to  mem- 
bers of  the  societies  at  the  minimum  of  cost  and  profit — 


104  RECENT  ECONOMIC  CHANGES. 

has  been  a  very  great  success ;  but  co-operation  in  produc- 
tion, so  far  as  it  has  been  attempted  by  these  same  societies, 
appears  to  have  succeeded  only  by  abandoning  co-operation 
in  the  original  and  best  sense  of  the  term.  For  example, 
some  of  the  great  and  most  successful  co-operative  distribu- 
tion societies  of  England,  in  order  to  increase  their  divi- 
dends, have  recently  undertaken  to  manufacture  a  portion 
of  the  goods  which  they  require,  and  thus  secure  for  them- 
selves the  profits  they  have  heretofore  paid  to  the  manu- 
facturers; and,  with  this  view,  the  manufacture  of  boots 
and  shoes  has  been  commenced  on  a  large  scale  by  two  of 
the  largest  of  such  societies  in  Glasgow  and  Manchester 
respectively — the  English  society  employing  a  thousand 
operatives,  and  disposing  of  goods  to  a  present  aggregate 
value  of  more  than  a  million  dollars  per  annum.  "  These 
manufacturing  enterprises  have  not,  however,  been  con- 
ducted on  co-operative  lines.  .  .  .  The  work-people  in  their 
factories  are  not  co-operators.  They  do  not  share  in  the 
profits  of  the  business.  They  receive  simply  the  market 
rate  of  wages."  They  are  on  just  as  bad  terms  with  their 
co-operative  employers  as  they  would  be  with  individual 
capitalists,  and  they  have  endeavored  to  better  their  condi- 
tion by  entering  upon  strikes ;  or,  in  other  words,  the  great 
Co-operative  Distribution  Society  managers  in  Great  Britain, 
finding  that  it  was  essential  to  their  success  as  manufactur- 
ing producers,  have  adopted  without  scruple  all  the  methods 
and  rules  that  prevail  in  similar  establishments  which  have 
been  incorporated  and  are  managed  solely  with  a  view  to  the 
profit  of  their  individual  capitalists  or  stockholders." 

But  this  is  not  the  whole  story.  Besides  these  great 
wholesale  co-operative  distribution  societies  which  have  en- 
gaged in  manufacturing,  there  are  a  large  number  of  smaller 
and  weaker  similar  societies  in  Great  Britain  which  are  also 
attempting  to  manufacture  the  same  description  of  goods 
for  the  profit  of  their  more  limited  circle  of  members,  and 
these  last  now  complain  that  they  are  absolutely  unable  to 


EQUALIZATION  OP  WAGES.  105 

withstand  the  competition  of  the  larger  wholesale  societies, 
which,  purchasing  labor  at  the  lowest  rate  in  the  open 
market,  denying  any  participation  of  profit  to  their  work- 
men, and  working  upon  the  largest  scale,  are  enabled  to 
produce  and  sell  cheaper.  "  So  that  all  the  disastrous  effects 
of  unlimited  and  unscrupulous  competition,  for  which  co- 
operation was  expected  to  be  a  cure,  are  showing  themselves 
among  the  co-operators,  and  another  example  is  to  be  added 
to  the  record  of  modern  economic  experience,  of  the  strong 
industrial  and  commercial  organizations  devouring  the 
weak." 

An  element  of  international  character  and  importance, 
growing  out  of  the  improvements  in  production  through 
machinery,  should  also  not  be  overlooked.  Whatever  of 
advantage  one  country  may  have  formerly  enjoyed  over 
another  by  reason  of  absolute  or  comparative  low  wages,  is 
now,  so  far  as  the  cost  of  machine-made  goods  is  concerned, 
through  the  destruction  of  handicrafts  and  the  extended 
use  and  improvements  in  machinery,  being  rapidly  reduced 
to  a  minimum.  For,  apart  from  any  enhancement  of  cost 
by  taxes  upon  imports,  there  is  at  present  but  very  little 
difference  in  all  countries  of  advanced  civilization  in  the  cost 
of  machinery,  of  the  power  that  moves  it,  or  of  the  crude 
materials  which  it  converts  into  manufactures.  The  ma- 
chine, therefore,  which  enables  the  labor  of  one  man  to  dis- 
pense with  the  cheap  labor  of  ten  men,  practically  reduces 
any  advantage  which  the  manufacturer  in  France,  Germany, 
or  other  countries,  paying  nominally  low  wages,  has  hereto- 
fore had  over  the  manufacturer  of  England  or  of  the  United 
States,  to  the  simple  difference  in  the  cost  of  the  labor  of 
the  operative  who  manages  the  machine  in  different  places ; 
and  all  experience  shows  that  the  invariable  concomitant  of 
high  wages,  conjoined  with  the  skillful  management  of  ma- 
chinery, is  a  low  cost  of  production. 

Attention  is  next  asked  to  the  economic — industrial, 
commercial,  and  financial — disturbances  that  have  also  re- 


106  RECENT  ECONOMIC  CHANGES. 

suited  in  recent  years  from  changes,  in  the  sense  of  improve- 
ments, in  the  details  of  the  distribution  of  products ;  and 
tfs  the  best  method  of  showing  this,  the  recent  course  of 
trade  in  respect  to  the  practical  distribution  and  supply  of 
one  of  the  great  articles  of  commerce,  namely,  tin-plate,  is 
selected. 

Before  the  days  of  the  swift  steamship  and  the  telegraph, 
the  business  of  distributing  tin-plate  for  consumption  in  the 
United  States  was  largely  in  the  hands  of  one  of  the  great 
mercantile  firms  of  New  York,  who  brought  to  it  large  en- 
terprise and  experience.  At  every  place  in  the  world  where 
tin  was  produced  and  tin-plate  manufactured  they  had  their 
confidential  correspondent  or  agent,  and  every  foreign  mail 
brought  to  them  exclusive  and  prompt  returns  of  the  state 
of  the  market.  Those  who  dealt  with  such  a  firm  dealt  with 
them  under  conditions  which,  while  not  discriminating  un- 
favorably to  any  buyer,  were  certainly  extraordinarily  favor- 
able to  the  seller,  and  great  fortunes  were  amassed.  But 
to-day  how  stands  that  business  ?  There  is  no  man,  however 
obscure  he  may  be,  who  wants  to  know  any  morning  the 
state  of  the  tin-plate  market  in  any  part  of  the  world,  but 
can  find  it  in  the  mercantile  journals.  If  he  wants  to  know 
more  in  detail,  he  joins  a  little  syndicate  for  news,  and  then 
he  can  be  put  in  possession  of  every  transaction  of  impor- 
tance that  took  place  the  day  previous  in  Cornwall,  Liver- 
.pool,  in  the  Strait  of  Sunda,  in  Australia,  or  South  America. 
What  has  been  the  result  ?  There  are  no  longer  great  ware- 
houses where  tin  in  great  quantities  and  of  all  sizes,  waiting 
for  customers,  is  stored.  The  business  has  passed  into  the 
hands  of  men  who  do  not  own  or  manage  stores.  They  have 
simply  desks  in  offices.  They  go  round  and  find  who  is 
going  to  use  tin  in  the  next  six  months.  They  hear  of  a 
railroad-bridge  which  is  to  be  constructed ;  of  a  certain 
number  of  cars  which  are  to  be  covered ;  that  the  salmon- 
canneries  on  the  Columbia  Kiver  or  Puget's  Sound  are  likely 
to  require  seventy  thousand  boxes  of  tin  to  pack  the  catch 


ECONOMIC  EXPERIENCES  OF  TIN-PLATE.         107 

of  this  year,  as  compared  with  a  requirement  of  sixty  thou- 
sand last  year — a  business,  by  the  way,  which  a  few  years 
ago  was  not  in  existence — and  they  will  go  to  the  builders, 
contractors,  or  business-managers,  and  say  to  them  :  "  You 
will  want  at  such  a  time  so  much  tin.  I  will  buy  it  for  you 
at  the  lowest  market  price,  not  of  New  York,  but  of  the 
world,  and  I  will  put  it  in  your  possession,  in  any  part  of 
the  continent,  on  a  given  day,  and  you  shall  cash  the  bill 
and  pay  me  a  percentage  commission  " — possibly  a  fraction 
of  one  per  cent ;  thus  bringing  a  former  great  and  compli- 
cated business  of  importing,  warehousing,  selling  at  whole- 
sale and  retail,  and  employing  many  middle-men,  clerks, 
book-keepers,  and  large  capital,  to  a  mere  commission  busi- 
ness, which  dispenses  to  a  great  extent  with  the  employment 
of  intermediates,  and  does  not  necessarily  require  the  pos- 
session or  control  of  any  capital.* 

Let  us  next  go  one  step  farther,  and  see  what  has  hap- 
pened at  the  same  time  to  the  man  whose  business  it  has 
been  not  to  sell  but  to  manufacture  tin-plate  into  articles 
for  domestic  use,,  or  for  other  consumption.  Thirty  or  forty 
years  ago  the  tinman,  whose  occupation  was  mainly  one  of 
handicraft,  was  recognized  as  one  of  the  leading  and  most 
skillful  mechanics  in  every  village,  town,  and  city.  His 

*  During  the  year  1887  oiie  of  the  oldest,  most  extensive,  and  successful 
firms  in  the  United  States  (New  York)  engaged  in  the  importation  and  sale  of 
teas — owning  their  own  vessels,  having  their  own  correspondents  in  China, 
and  possessed  of  extensive  capital — retired  from  business,  and  gave  to  the 
public  the  following  reason  for  so  doing,  namely,  "  a  conviction  that  in  the 
present  condition  of  the  tea-market  it  was  impossible  for  a  firm  to  do  sufficient 
business  to  guarantee  a  commensurate  return  in  form  of  profit  for  the  volume 
of  monetary  outlay  and  the  anxiety  and  care  of  management."  It  was  also 
stated  that  the  conditions  of  the  tea-importing  business  were  now  such  as  not 
to  allow  of  successful  operations  on  a  largo  scale,  involving  as  formerly  the 
carrying  of  large  quantities  of  the  commodity  itself,  which  deteriorates  rapidly 
with  age,  and  demands  for  profitable  handling  a  rise  of  value  unknown  to  the 
present  market.  Jobbers,  also,  it  was  found,  who  once  bought  of  houses  like 
the  firm  in  question,  now  purchase  direct  from  the  foreign  growers,  and 
thereby  deprive  the  lurge  importer  in  his  own  market  of  a  very  necessary  ele- 
ment of  patronage. 


108  RECENT  ECONOMIC  CHANGES. 

occupation  has,  however,  now  well-nigh  passed  away.  For 
example,  a  townsman  and  a  farmer  desires  a  supply  of  milk- 
cans.  He  never  thinks  of  going  to  his  corner  tinman,  be- 
cause he  knows  that  in  New  York  and  Chicago  and  Phila- 
delphia, and  other  large  towns  and  cities,  there  is  a  special 
establishment  fitted  up  with  special  machinery,  which  will 
make  his  can  better  and  fifty  per  cent  cheaper  than  he  can 
have  it  made  by  hand  in  his  own  town.  And  so  in  regard 
to  almost  all  the  other  articles  which  the  tinman  formerly 
made.  He  simply  keeps  a  stock  of  machine-made  goods,  as 
a  small  merchant,  and  his  business  has  come  down  from 
that  of  a  general,  comprehensive  mechanic  to  little  other 
than  a  tinker  and  mender  of  pots  and  pans.  Where  great 
quantities  of  tin-plate  are  required  for  a  particular  use,  as, 
for  example,  the  canning  of  salmon  or  lobsters,  of  biscuit, 
or  of  fruit  and  vegetables,  the  plates  come  direct  from  the 
manufactory  to  the  manufacturer  of  cans  or  boxes,  in  such 
previously  agreed-upon  sizes  and  shapes  as  will  obviate  any 
waste  of  material,  and  reduce  to  a  minimum  the  time  and 
labor  necessary  to  adapt  them  to  their  respective  uses.  And 
by  this  arrangement  alone,  in  one  cracker  (biscuit)  bakery 
in  the  United  States,  consuming  forty  thousand  tin  boxes 
*per  month,  forty  men  are  now  enabled  to  produce  as  large  a 
product  of  boxes  in  a  given  time  as  formerly  required  fifty 
men ;  and,  taken  in  connection  with  machinery,  the  labor 
of  twenty -five  men  in  the  entire  business  has  become 
equivalent  to  that  of  the  fifty  who  until  recently  worked  by 
other  methods.  And  what  has  been  thus  affirmed  of  tin- 
plate  might  be  equally  affirmed  of  a  great  variety  of  other 
leading  commodities ;  the  blacksmith,  for  example,  no  longer 
making,  but  buying  his  horseshoes,  nails,  nuts,  and  bolts ; 
the  carpenter  his  doors,  sash,  blinds,  and  moldings ;  the 
wheelwright  his  spokes,  hubs,  and  felloes ;  the  harness- 
maker  his  straps,  girths,  and  collars  ;  the  painter  his  paints 
ground  and  mixed,  and  so  on ;  the  change  in  methods  of 
distribution  and  preparation  for  final  consumption  having 


CHANGES  IN  RETAIL  DISTRIBUTION.  109 

been  equally  radical  in  almost  every  case,  though  varying 
somewhat  in  respect  to  particulars. 

The  same  influences  have  also  to  a  great  degree  revolu- 
tionized the  nature  of  retail  trade,  which  has  been  aptly  de- 
scribed as,  "  until  lately,  the  recourse  of  men  whose  charac- 
ter, skill,  thrift,  and  ambition  won  credit,  and  enabled  them 
to  dispense  with  large  capital."  Experience  has  shown  that, 
under  a  good  organization  of  clerks,  shopmen,  porters,  and 
distributors,  it  costs  much  less  proportionally  to  sell  a  large 
amount  of  goods  than  a  small  amount,  and  that  the  buyer 
of  large  quantities  can,  without  sacrifice  of  satisfactory 
profit,  afford  to  offer  to  his  retail  customers  such  advantages 
in  respect  to  prices  and  range  of  selection  as  almost  to  pre- 
clude competition  on  the  part  of  dealers  operating  on  a 
smaller  scale,  no  matter  how  otherwise  capable,  honest,  and 
diligent  they  may  be.  The  various  retail  trades,  in  the 
cities  and  larger  towns  of  all  civilized  countries,  are  accord- 
ingly being  rapidly  superseded  by  vast  and  skillfully  organ- 
ized establishments — and  in  Great  Britain  and  Europe  by 
co-operative  associations — which  can  sell  at  little  over  whole- 
sale prices  a  great  variety  of  merchandise,  dry-goods,  manu- 
factures of  leather,  books,  stationery,  furs,  ready-made 
clothing,  hats  and  caps,  and  sometimes  groceries  and  hard- 
ware, and  at  the  same  time  give  their  customers  far  greater 
conveniences  than  can  be  offered  by  the  ordinary  shop-keeper 
or  tradesman.  In  London,  the  extension  of  the  "  tramway  " 
or  street-railroad  system  is  even  advocated  on  the  single 
ground  that  the  big  stores  need  quicker  access  to  their 
branch  establishments,  in  order  to  still  further  promote  the 
economy  of  goods  distribution. 

The  spirit  of  progress  conjoined  with  capital,  and  hav- 
ing in  view  economy  in  distribution  and  the  equalization  of 
values,  is  therefore  controlling  and  concentrating  the  busi- 
ness of  retailing,  in  the  same  manner  aa  the  business  of 
wholesale  distribution  and  transportation,  and  of  production 
by  machinery,  is  being  controlled  and  concentrated,  and  all 

6 


110  RECENT  ECONOMIC  CHANGES. 

to  an  extent  never  before  known  in  the  world's  experience. 
And  in  both  wholesale  and  retail  operations  the  reduction 
of  profits  is  so  general  that  it  must  be  accepted  as  a  perma- 
nent feature  of  the  business  situation,  and  a  natural  result 
of  the  new  conditions  that  have  been  noted. 

Keeping  economy  in  distribution  constantly  in  view  as 
an  essential  for  material  progress,  the  tendency  is  also  every- 
where to  dispense  to  the  greatest  extent  with  the  "  middle- 
man," and  put  the  locomotive  and  the  telegraph  in  his 
place.  Eetail  grocers,  as  before  shown,  now  buy  their  teas 
directly  of  the  Chinaman,  and  dispense  with  the  services  of 
the  East  Indian  merchant  and  his  warehouses.  Manufact- 
urers deal  more  directly  with  retailers,  with  the  result,  it  is 
claimed,  of  steadying  supply  and  demand,  and  preventing 
the  recurrence  of  business  crises.  The  English  cotton-spin- 
ner at  Manchester  buys  his  raw  cotton  by  cable  in  the  in- 
terior towns  of  the  cotton-growing  States  of  North  America, 
and  dispenses  with  the  services  of  the  American  broker  or 
commission-merchant.  European  manufacturers  now  send 
their  agents  with  samples  of  merchandise  to  almost  every 
locality  in  America,  Asia,  and  the  Pacific  islands,  where 
commerce  is  protected  and  transportation  practicable,  and 
offer  supplies,  even  in  comparatively  small  quantities,  on 
better  terms  than  dealers  and  consumers  can  obtain  from 
the  established  wholesale  or  retail  merchants  of  their  vicin- 
ity. A  woolen  manufacturer,  for  example,  prepares  a  set  of 
patterns  for  an  ensuing  season,  sends  his  agent  around  the 
world  with  them,  and  makes  exactly  as  many  pieces  as  his 
customers  want,  not  weaving  a  single  yard  for  chance  sale. 
A  great  importing  house  will  take  orders  for  goods  to  be 
delivered  two  or  three  months  afterward,  and  import  exactly 
what  is  ordered  and  no  more.  Rent,  insurance,  handling, 
and  profits  are  thus  minimized.  Before  the  days  of  railroad 
extension,  country  buyers  used  to  have  to  come  to  the  cen- 
ters of  trade  in  spring  and  fall  to  lay  in  their  supplies ;  now 
they  come  every  mouth,  if  they  wish,  to  assort  a  stock  which 


CHANGE  IN  GOODS  DISTRIBUTION.  HI 

is  on  an  average  much  less  heavy  than  it  used  to  be,  and  can 
be  replenished  by  the  dealer  at  very  short  notice  by  tele- 
graph to  the  manufacturer,  whether  he  resides  at  home  or 
beyond  an  ocean.  The  great  dry-goods  houses  of  the  large 
commercial  cities  are  in  turn  reducing  their  storage  and 
becoming  mere  sales-rooms,  the  merchandise  marketed  by 
them  being  forwarded  directly  from  the  point  of  manu- 
facture to  that  of  distribution.  A  commission  house  may, 
therefore,  carry  on  a  large  business,  and  yet  not  appear  to 
the  public  to  be  extensively  occupied.  One  not  inconsider- 
able gain  from  such  a  change  in  goods  distribution  accrues 
from  a  consequent  reduction  in  the  high  rates  and  aggre- 
gates of  city  fire  insurances. 

From  these  specimen  experiences  it  is  clear  that  an  almost 
total  revolution  has  taken  place,  and  is  yet  in  progress,  in 
every  branch  and  in  every  relation  of  the  world's  indus- 
trial and  commercial  system.  Some  of  these  changes  have 
been  eminently  destructive,  and  all  of  them  have  inevitably 
occasioned,  and  for  a  long  time  yet  will  continue  to  occa- 
sion, great  disturbances  in  old  methods,  and  entail  losses  of 
capital  and  changes  of  occupation  on  the  part  of  individuals. 
And  yet  the  world  wonders,  and  commissions  of  great  states 
inquire,  without  coming  to  definite  conclusions,  why  trade 
and  industry  in  recent  years  have  been  universally  and  ab- 
normally disturbed  and  depressed. 

There  is  one  curious  example  in  which  improvement  is 
being  sought  for  at  the  present  time,  though  what  at  first 
seems  to  be  retrogression.  With  the  great  extension  and 
perfecting  of  the  railway  system,  and  the  consequent  great 
reduction  in  the  cost  of  merchandise  carriage  through  its 
agency,  it  has  been  generally  assumed  that  there  was  no 
longer  any  necessity  for  long  lines  of  canals,  or  profit  in 
their  maintenance  and  operation  ;  and,  as  a  matter  of  fact, 
many  canals  of  expensive  construction  in  England  and  the 
United  States  have  been  absolutely  abandoned.  But  at  the 
present  time  there  is  a  tendency — especially  in  Europe — to 


112  RECENT  ECONOMIC  CHANGES. 

return  to  the  use  of  inland  navigation — canals  and  rivers 
— for  the  purpose  of  still  further  cheapening  transporta- 
tion. 

There  is  no  question  that  goods  can  be  carried  much 
cheaper  by  water  than  by  rail.  The  original  cost  per  mile 
of  an  ordinary  canal  in  England  has  been  estimated  at  not 
more  than  one  fourth  the  cost  of  building  a  railway  in 
that  country ;  and  the  expense  of  managing  and  main- 
taining a  canal  in  good  workable  order  is  not  in  excess  of 
one  fifth  of  the  charges  of  a  corresponding  railway  company. 
The  average  canal  charges  in  England  are,  therefore,  only 
about  one  half  as  much  as  railway  rates  for  the  same  descrip- 
tion of  traffic ;  and,  for  the  transportation  of  imperishable 
goods,  when  the  time  occupied  in  transit  is  not  a  prime 
factor,  cheapness  of  carriage,  in  these  days  when  keen  com- 
petition is  reducing  the  margin  of  profit  on  the  production 
of  commodities  to  a  minimum,  has  become  more  than  ever 
a  matter  of  the  first  importance.  The  attention  of  English 
commercial  men  and  manufacturers  is,  accordingly,  largely 
directed  at  the  present  time  to  the  necessity  of  again  using 
and  improving  existing  inland  water-ways,  and  of  construct- 
ing additional  canals,  as  a  means  of  transporting  merchandise 
at  lower  rates  than  those  charged  by  railways ;  and  one  prac- 
tical outcome  of  this  interest  has  been  the  chartering  and 
constructive  commencement  of  an  immense  ship-canal  be- 
tween Liverpool  and  Manchester,  which,  it  is  predicted, 
"  will  effect  a  sort  of  revolution  in  the  Lancaster  cotton- 
trade,"  and  the  inception  of  which,  moreover,  was  signifi- 
cantly opposed  by  all  the  railway  companies  with  which  the 
canal  is  likely  to  come  into  competition.  Propositions  for  the 
construction  of  other  important  British  ship-canals,  as  from 
Sheffield  to  the  Humber,  and  with  a  view  of  cheapening 
transportation  from  Birmingham,  are  also  under  consider- 
ation. It  is  also  to  be  noted  that  a  very  considerable  num- 
ber of  the  British  canals,  that  have  been  kept  up  and  not 
allowed  to  become  useless,  continue  to  pay  good,  and,  in  a  few 


REVIVAL  OF  CANAL  TRANSPORTATION.          113 

cases,  large  dividends  ;  and  that  the  price  of  their  stocks  is 
often  largely  in  excess  of  their  par  value. 

In  1880  the  French  Government,  acting  upon  the  as- 
sumption that  the  canals  and  river  transportation  of  France 
were  likely  to  be  crushed  out  by  railway  competition,  ex- 
empted the  former  from  all  taxation.  The  result  has  been, 
that  the  total  tonnage  moved  (per  kilometre)  upon  the  ca- 
nals and  rivers  of  France  increased  sixty-three  per  cent 
between  1880  and  1887,  while  during  the  same  period  the 
transportation  by  the  main  lines  of  the  French  railway  sys- 
tem fell  off  to  the  extent  of  nearly  thirteen  per  cent.  The 
French  railways  are,  accordingly,  demanding  a  reimposition 
of  the  tolls  taken  off  the  canal  and  river  traffic  in  1880. 

In  the  United  States  the  resuscitation  of  the  decayed  ca- 
nal system  of  transportation  has  not  as  yet  been  considered 
as  desirable,  and  probably  because  the  average  charges  for 
railroad  freight  service  is  considerably  below  the  average 
rates  of  any  other  country  in  the  world ;  although  other 
nations  have  nominally  cheaper  labor  and  far  denser  popu- 
lations. 


IV. 

Depression  of  prices  as  a  cause  of  economic  disturbance — Manifestations  of 
such  disturbances — Their  universality — Average  fall  in  prices  since  1867- 
"11 — Methods  of  determining  averages — Cause  of  the  decline — Two  gen- 
eral theories — General  propositions  fundamental  to  inquiry — Eecent  pro- 
duction and  price  experiences  of  staple  commodities — Sugar — Petroleum 

—  Copper  —  Iron  —  Quicksilver  —  Silver — Tin — Tin-plate — Lead — Coal — 
Coffee  and  tea — Quinine — Paper  and  rags— Nitrate  of  soda — Meat — Cheese 

—  Fish  —  Freights  —  Wheat— Cotton— Wool— Silk— Jute— Conclusions  of 
the  British  Gold  and  Silver  Commission. 

DEPRESSION  of  prices  has,  to  a  large  extent,  been  ac- 
cepted as  a  prime  cause  of  the  "  economic  disturbance " 
which  has  prevailed  since  1873.  Indeed,  Mr.  Eobert  Giffen, 
the  well-known  English  economist  and  officer  of  the  British 
Board  of  Trade,  in  an  article  contributed  to  the  "  Contempo- 
rary Keview,"  June,  1885,  does  not  hesitate  to  express  the 
opinion  that  "  it  is  clearly  unnecessary  to  assign  any  other 
cause  for  the  gloom  of  the  last  year  or  two  " ;  and,  continu- 
ing, he  further  says : 

"  The  point  to  which  I  would  draw  special  attention  is,  that  .  .  . 
the  most  disastrous  characteristic  of  the  recent  fall  of  prices  has  been 
the  descent  all  round  to  a  lower  range  than  that  of  which  there  had 
been  any  previous  experience.  It  is  this  peculiarity  which — more  than 
anything  else — has  aggravated  the  gloom  of  merchants  and  capitalists, 
during  the  last  few  years.  Fluctuations  of  prices  they  are  used  to. 
Merchants  know  that  there  is  one  range  of  prices  in  a  time  of  buoy- 
ancy and  inflation,  and  quite  another  range  of  prices  in  times  of  dis- 
credit. By  the  customary  oscillations,  the  shrewder  business  people 
are  enabled  to  make  large  profits,  but  during  the  last  few  years  the 
shrewder,  as  well  as  the  less  shrewd,  have  been  tried.  Operations  they 
ventured  on  when  prices  were  falling  to  the  customary  low  level  have 
failed  disastrously,  because  of  a  further  fall  which  is  altogether  with- 


DEPRESSION  OF  PRICES.  115 

out  precedent.  The  change  is  more  like  a  revolution  in  prices  than 
anything  which  usually  happens  in  an  ordinary  cycle  of  prosperity  and 
depression  in  trade." 

Here,  then,  is  a  description  of  the  extent  of  the  recent 
fall  in  prices,  and  its  influence  in  producing  and  aggravating 
the  gloom  of  merchants  and  capitalists,  by  one  well  compe- 
tent to  appreciate  and  describe  what  has  happened.  The 
point  of  novelty  and  most  significance,  however,  in  Mr.  Gif- 
fen's  statement  is,  not  that  a  depression  of  prices  has  been 
productive  of  gloom  and  a  depression  of  business; — for  no 
fact  is  better  recognized  than  that  nothing  is  more  produc- 
tive of  gloom  to  the  industrial  and  mercantile  community 
owning  or  carrying  stocks  of  merchandise  than  losses  experi- 
enced or  anticipated  through  a  fall  in  prices ;  but  that  the 
recent  fall  in  the  prices  of  the  great  staple  commodities  of 
the  world  has  been  in  extent  and  character  without  prece- 
dent in  the  world's  history.* 

A  further  fact  of  the  highest  importance,  and  one  that 
is  not  disputed,  is,  that  no  peculiarity  of  currency,  banking, 

*  "  Many  who  discuss  this  question,  and  whose  opinions  generally  com- 
mand deference,  appear  scarcely  to  realize  the  enormous  extent  of  the  fall,  and 
it  is  only  by  means  of  very  extensive  statistics  and  of  a  comparison  of  various 
periods  that  a  clear  insight  into  the  details  and  a  broad  view  of  the  whole  caft 
be  gained." — AUGUSTUS  SAUERBECK'S  Journal  of  the  Statistical  Society  of 
London,  September,  1886. 

"  It  is  hardly  possible  to  gain  an  adequate  conception  of  the  change  in  the 
condition  of  man  except  through  the  development  of  the  system  of  prices. 
We  may  compare  Abraham,  in  the  first  recorded  monetary  transaction,  buying 
the  field  of  Ephron  for  four  hundred  shekels  of  silver,  'current  money  of  the 
merchants,'  with  his  latest  descendants  the  Rothschilds,  bringing  the  enter- 
prises of  nations  and  of  kings  to  the  tribunal  of  the  money  market.  The 
prices  of  corn  and  mutton  were  matters  of  small  concern  to  the  men  of  Abra- 
ham's day.  They  made  their  own  arrangements  for  food  independent  of 
their  neighbors'  wants.  They  planted  their  fields,  tended  their  flocks  and 
defended  them,  and  according  to  their  success  in  these  pursuits  did  they  and 
their  children  have  much  or  little  to  eat.  But  now  in  Rothschild's  time  each 
minute  want  of  Jew  or  Gentile  is  conceived  on  a  money  scale.  It  is  attain- 
able, or  impossible,  according  to  its  price.  Almost  every  action  of  a  very 
large  part  of  mankind  is  controlled  by  considerations  of  price." — Congested 
Prices,  by  M.  L.  SOUDDEB,  Jr..  Chicago,  1883. 


116  RECENT  ECONOMIC  CHANGES. 

or  standard  of  value,  or  form  of  government,  or  incidence 
and  degree  of  taxation,  or  military  system,  or  condition  of 
land  tenure,  or  legislation  respecting  trade,  tariffs,  and  boun- 
ties, or  differences  in  the  relations  between  capital  and  labor 
in  different  countries,  have  been  sufficient  to  guard  and  save 
any  nation  from  the  economic  disturbances  or  trade  depres- 
sion which  has  been  incident  to  such  changes  in  prices. 

The  question  which  here  naturally  suggests  itself,  as  to 
what  in  general  has  been  the  extent  of  the  recent  fall  in 
prices,  is  perhaps  best  answered  from  the  basis  of  English 
figures,  by  M.  Augustus  Sauerbeck,  who,  as  the  result  of  an 
exhaustive  inquiry  into  the  price  movements  of  thirty-eight 
leading  articles  of  raw  produce  since  1818-'27  (communi- 
cated to  the  Statistical  Society  of  London  and  published  in 
the  journal  of  their  "Proceedings"  for  September,  1886, 
and  March,  1887),  has  arrived  at  the  following  conclusions : 
There  was  a  persistent  decline  in  the  average  prices  of  gen- 
eral commodities  in  England  from  the  beginning  to  the 
middle  of  the  present  century ;  or,  more  exactly,  to  1849. 
From  thence  there  was  an  advance,  which  culminated  in 
1873.  But  leaving  out  of  consideration  a  remarkable  specu- 
lative period  from  1870  to  1874,  coincident  with  the  Franco- 
German  War  and  the  payment  of  the  war  indemnity  by 
France,  during  which  period  prices  rose  with  great  rapidity 
from  1870  to  1873,  and  fell  in  the  succeeding  year  (1874) 
below  their  average  starting-point  in  1870,  the  decline  of 
prices  may  be  regarded  as  having  been  continuous  from 
1864  to  1886.  Compared  with  the  average  prices  of  general 
commodities  from  1867-'77,  the  period  from  1878-'85  shows 
a  depreciation  of  eighteen  per  cent.  But  if  the  average 
prices  of  1885  alone  be  taken,  the  decline  from  the  average 
for  1867-'77  is  twenty-eight  per  cent ;  or,  continuing  the 
comparison  through  1886  and  embracing  a  somewhat  larger 
number  of  articles,  the  average  depreciation,  in  the  opinion 
of  M.  Sauerbeck,  has  amounted  to  thirty-one  per  cent.  Fur- 
thermore, the  average  level  of  prices  for  1886,  according  to 


AVERAGE  DECLINE  IN  PRICES.  H7 

the  tables  of  M.  Sauerbeck,  was  considerably  below  the  aver- 
age for  the  year  1848,  which  in  turn  appears  to  have  been  the 
lowest  previous  point  for  the  century  subsequent  to  1820. 

Many  similar  inquiries,  embracing  in  some  instances  a 
much  larger  number  of  articles  than  were  selected  by  M. 
Sauerbeck,  have  been  instituted  in  recent  years  by  other  in- 
vestigators in  England,  France,  Germany,  and  the  United 
States ;  and  while  there  is  much  of  agreement  as  respects 
results  in  a  majority  of  cases,  no  figure  representing  the 
average  decline  during  the  periods  under  investigation  would 
probably  be  universally  accepted  as  every  way  satisfactory 
and  conclusive.  For  example,  an  analysis  of  the  exports 
and  imports  of  the  United  Kingdom  for  the  years  1873  and 
1883  respectively,  according  to  the  returns  of  the  British 
Board  of  Trade — prices  and  quantities  being  taken  into  con- 
sideration— has  led  the  London  "  Economist "  to  the  follow- 
ing conclusions :  In  respect  to  articles  of  food,  which  con- 
stitute nearly  two  thirds  of  British  imports,  and  which  being 
of  the  most  staple  nature  and  least  subject  to  wide  varia- 
tions of  supply  and  demand  are  the  most  steady  in  price, 
the  valuation — the  quantities  compared  being  the  same — for 
1873  was  about  fifteen  per  cent  higher  than  in  1883.  Of 
raw  materials  for  manufacture,  which  constitute  the  bulk 
of  other  British  imports,  the  valuation  for  1873  was  higher 
than  in  1883  to  the  extent  of  about  thirty  per  cent.  On 
the  other  hand,  an  analysis  of  the  exports  of  the  United 
Kingdom,  consisting  chiefly  of  what  may  be  called  commer- 
cial articles — manufactures,  metals,  etc. — which  are  more 
directly  dependent  upon  the  fluctuations  in  commercial  con- 
ditions, speculation,  supply  and  demand,  etc.,  and  which, 
therefore,  are  always  far  more  sensitive  to  depreciatory  con- 
ditions than  are  food  products,  or  even  raw  materials,  for 
the  latter  can  be  carried  for  an  improvement  in  prices  where 
manufactures  can  not,  showed  a  valuation  in  1873  higher 
by  about  forty-eight  per  cent  than  1883.  As  the  values 
compared  in  these  analyses  embrace  the  transactions  of  the 


118  RECENT  ECONOMIC  CHANGES. 

leading  commercial  nation  in  every  kind  of  commodity  and 
with  all  the  countries  of  the  world,  they  probably  reflected  with 
approximative  accuracy  the  condition  and  changes  of  univer- 
sal values  in  all  markets  for  the  period  under  consideration. 

A  similar  analysis  of  British  imports  and  exports  for  the 
years  1885  and  1886  (also  instituted  by  the  "  Economist ") 
furnished  evidence,  almost  in  the  nature  of  a  demonstra- 
tion, of  the  continued  tendency  of  prices  to  decline  during 
the  two  (later)  years  mentioned,  and  also  of  the  continued 
universality  of  such  tendency.  Thus,  looking  first  at  ex- 
ports, it  appears  that  there  was  an  increase  during  the  year 
1886  in  the  quantities  of  British  and  colonial  commodities 
exported  of  6-02  per  cent,  as  compared  with  similar  aggre- 
gates for  1885  ;  or  Great  Britain  sent  out  106,020  pounds, 
tons,  or  other  quantities  in  1886,  in  place  of  100,000  in  1885. 
Comparing,  however,  the  sum  which  the  quantities  actually 
exported  in  1886  would  have  cost  at  the  prices  of  1885,  a 
decline  in  price  is  indicated  of  6 '34  per  cent ;  or  while  send- 
ing away  106,020  pounds,  tons,  or  other  quantities  in  1886,  as 
compared  with  100,000  in  1885,  Great  Britain  received  back 
in  money  value  only  $93,660  for  the  same  quantities  which 
in  the  previous  year  brought  $100,000. 

A  similar  examination  of  British  imports  for  1886  also 
brought  out  the  further  interesting  fact  that  the  average 
decline  in  the  prices  of  the  goods  imported  was  almost  pre- 
cisely the  same  as  in  prices  of  goods  exported.  The  increase 
in  quantities  of  imports  was  less  than  one  per  cent ;  or  the 
country  brought  in  100,796  pounds,  tons,  or  other  quanti- 
ties, in  place  of  every  100,000  in  1885.  But  the  decline  in 
prices  was  6-373  per  cent ;  so  that  the  country  paid  only 
$93,627  for  the  same  quantities  for  which  it  paid  $100,000 
in  the  previous  year.  The  decline  in  the  general  range  of 
prices  for  the  year  1886,  as  compared  with  1885,  and  as 
measured  again  by  the  actual  exports  and  imports  of  the 
greatest  exporting  and  importing  nation  of  the  world,  would 
therefore  appear  to  have  been  in  excess  of  six  per  cent ;  and 


PRICES  FROM  1860  TO   1888. 


119 


this  decline  would  seem  to  have  occurred  during  the  same 
period  in  all  those  countries  in  which  Great  Britain  dealt  as 
a  seller  equally  with  those  in  which  she  dealt  as  a  buyer ; 
or,  in  other  words,  this  decline  was  practically  universal. 

An  investigation  of  American  prices,  instituted  by  Mr. 
William  M.  Grosvenor,  in  which  quotations  of  some  two 
hundred  staple  articles  were  compared,  and  the  quantities 
of  the  same  which  the  same  amount  of  money  (gold)  would 
purchase  were  also  taken  into  account,  led  to  the  conclu- 
sion that  the  general  average  of  prices  in  New  York,  at  the 
close  of  the  year  1885,  was  77'43  as  against  100  in  1860. 

During  the  year  1888  there  was  a  considerable  expansion 
and  improvement  in  trade  throughout  the  world,  and  a  sig- 
nificant advance  in  the  prices  of  many  great  staple  commodi- 
ties— cereals  and  meats  excepted.  In  the  case  of  twenty- 
two  selected  commodities,  this  advance,  calculated  according 
to  the  index  system  of  the  London  "  Economist,"  was  a  trifle 
over  two  per  cent  (2'150).  Such  an  evident  lack  of  elas- 
ticity in  prices,  coincident  with  a  decided  improvement  in 
trade,  would  seem  to  show  that  the  causes,  whatever  they 
may  be,  which  occasioned  the  marked  depression  of  prices 
since  1873  was  still  influential  and  operative  down  to  the 
close  of  the  year  1888.* 

*  The  following  table,  according  to  Mr.  Robert  Giffen,  represents  the  com- 
parative wholesale  prices  of  leading  commodities  on  the  English  market  for 
January,  1873, 1879, 1883,  1885,  and  for  December,  1888  : 


ARTICLES. 

1873. 

1879. 

1883. 

1885. 

1888. 

Scotch  pig-iron,  per  ton  
Coals,  per  ton.         

127*. 
30*. 

43*. 
19*. 

47*.  Bd. 
17*  6d. 

41*.  9d. 
18*. 

41*.  lid. 
17*.  9d. 

Copper,  Chili  bars,  per  ton  . 
Wheat,  Gazette  average,  per 
qr    

911. 
55*.  11  d. 

67f. 
39*.  7<2. 

65*. 
40*.  4d. 

WAI. 
34*.  lid. 

78/. 
31*.  9(f. 

Beef,  prime  small,  per  8  Ibs. 
Cotton,  midland,  per  Ib.  .  .  . 
Wool,  per  pack       

.',-.  ::./. 
Wd. 
2Sl. 

4*.  9d. 
M£d. 

131. 

6* 

5»/,.<*. 
\U. 

5s.  4d. 
6d. 
III. 

4*.  2d. 
5'Aorf. 
fflL 

Sugar,  Muscovado,  per  cwt. 
Coffee,  Ceylon,  per  cwt  
Pepper,  black,  per  Ib  

21*.  6d. 
80*. 
Id. 

18*. 
'     65*. 
4^d. 

16*.  6d. 
78*.  Gd. 
b%d. 

10*. 
71*. 
8d. 

18s.  Bd. 
91*. 
*l%d. 

Saltpeter,  per  cwt  

29*. 

19*. 

19*. 

15*.  Bd. 

16*.  6d. 

120  RECENT  ECONOMIC  CHANGES. 

The  usual  method  employed  by  European  economists  in 
order  to  form  a  correct  idea  of  the  changes  of  prices  in  one 
period  as  compared  with  another,  is  to  take  the  prices  of 
certain  selected  commodities  in  a  given  year,  or  the  average 
prices  of  a  series  of  years,  as  the  standard ;  represent  this 
by  the  figure  100  or  1,000,  and  then  note  the  increase  or 
decrease  in  price  in  the  case  of  each  article  in  each  subse- 
quent year  in  proportion  to  this  standard.  Combining  the 
percentage  of  price  alterations  among  all  the  articles,  a  total 
of  the  variations  experienced  become  known,  and  the  num- 
ber thus  obtained  is  termed  an  index  number  for  the  year,  or 
other  period  under  consideration ;  or  a  number  expressive 
of  the  ratio  of  price  at  a  given  date  to  the  average  of  some 
former  period.  Thus,  for  example,  if  the  average  price  of 
forty  articles  in  the  year  18*0  were  to  be  taken  at  100,  and 
the  average  decline  in  the  prices  of  these  same  articles  for 
the  year  1810  was  found  to  be  20  per  cent,  the  index  num- 
ber for  the  year  1800  would  be  100,  and  for  the  year  1810, 
80.* 

The  difficulties  in  the  way  of  obtaining  satisfactory  av- 
erages from  comparisons  of  prices  at  different  periods  by  the 
above  or  any  other  methods  are,  however,  almost  insuper- 
able ;  so  that  it  may  well  be  doubted  whether  the  determi- 
nation of  an  average  of  general  prices  is  ever  within  the 
bounds  of  possibility.  Quotations  for  a  given  day  or  month 
do  not  necessarily  show  the  average  for  the  year ;  and,  in 
like  manner,  the  selection  of  a  limited  number  of  articles 

Commenting  upon  this  exhibit  of  prices,  Mr.  Giffen  remarks:  "Although 
some  prices  are  higher  now  (December,  1888)  than  in  1885,  they  are  in  a  very 
few  cases  higher  than  in  1883.  They  are,"  on  the  average,  "far  below  the 
level  of  1873,  and  a  good  deal  below  the  level  of  1879.  It  is  also  well  to  bear 
in  mind  that  the  latter  year  was  one  of  depression  of  trade,  while  1888  was  one 
of  expansion." 

*  For  a  full  exhibit  aud  discussion  of  these  tables,  reference  is  made  to  a 
paper  in  the  Harvard  "  Quarterly  Journal  of  Economics  "  (vol.  i,  No.  8,  Bos- 
ton, 1887),  by  Prof.  J.  Laurence  Laughlin,  and  to  the  "  Final  Eeport  of  the 
k     (British)  Gold  aud  Silver  Commission,"  pp.  16,  17,  1888. 


THE  "INDEX"  NUMBER  SYSTEM.  121 

for  comparison  can  not  insure  correct  conclusions  respecting 
the  movement  of  prices  in  general.  All  methods  of  com- 
paring price  variations  which  content  themselves  with  mere 
average  quotations  of  different  articles,  and  which  do  not 
pay  due  regard  to  the  relative  importance  of  each  article  in 
the  domestic  and  foreign  commerce  of  a  country ;  which, 
for  example,  allows  a  change  of  eighty  per  cent  in  the  price 
of  an  article  like  cochineal,  of  which  the  value  sold  in  any 
one  year  is  small,  to  balance  a  change  of  two  per  cent  in  an 
article,  like  sugar,  the  value  of  which  annually  sold  is  enor- 
mous, are  also  in  a  great  degree  deceptive  and  worthless  ;  * 
and  even  when,  in  the  comparison  of  prices,  the  importance 
of  considering  relative  quantities  is  fully  recognized,  the 
data  for  ascertaining  these  relations  are  extremely  uncer- 
tain and  questionable.  The  utmost  of  service  that  all  such 
tabular  comparisons  of  prices,  even  when  prepared  with  all 
desirable  qualifications,  are  capable  of  rendering,  would, 
therefore,  seem  to  be  limited  to  certain  broad  general  re- 
sults, or  to  the  affording  of  important  inferences  respecting 
the  tendencies  and  variations  of  prices.  In  all  other  re- 
spects they  are  little  other  than  curiosities  ;  inasmuch  as  if 
some  articles  in  a  given  period  have  risen  and  others  have 
fallen  in  price,  and  if  the  fall  of  some  and  the  rise  of  others 
can  be  undoubtedly  traced  to  the  action  of  entirely  different 
causes,  the  grouping  of  these  facts  into  the  form  of  tables, 
and  the  endeavor  to  reduce  the  sum  of  the  respective  changes 
to  a  common  average,  can  prove  nothing  whatever  as  to  the 
cause  or  causes  which  have  been  operative  in  producing  the 

*  One  of  the  best-known  tables  of  this  character,  embracing  twenty-two 
different  articles,  has  been  kept  by  the  London  "  Economist "  for  many  years 
aa  a  constituent  element  of  current  British  commercial  history,  and  by  many 
is  regarded  as  about  the  most  reliable  indication  of  the  movements  in  the 
prices  of  wholesale  commodities  that  can  bo  obtained.  The  results  of  this  table 
are,  in  brief,  as  follows :  If  the  index  number  2,947  be  taken  to  represent  the 
combined  prices  of  twenty -two  leading  commodities  at  the  close  of  1872,  the 
combined  prices  of  the  same  commodities  at  the  close  of  1886  was  2,059,  a 
decline  of  over  thirty  per  cent. 


122  RECENT  ECONOMIC  CHANGES. 

changes.  And  between  such  discordant  results  effected  by 
entirely  diverse  influences,  there  would,  furthermore,  seem 
to  be  no  possibility  of  establishing  an  average ;  for  the  price 
of  some  articles,  whose  use  has  been  superseded  or  impaired 
by  change  of  fashion  or  new  inventions,  may  fall  nearly  or 
quite  to  zero,  while  the  price  of  others,  by  reason  of  increased 
demand  or  interrupted  supply,  may  rise  almost  to  infinity 
by  comparison ;  and  between  such  extremes  there  may  be 
any  number  of  gradations.* 

All,  therefore,  that  can  be  confidently  affirmed  in  respect 
to  the  extent  of  the  recent  depression  of  prices  is,  that  com- 
paring the  data  for  1885-'86  with  those  of  1866-'76,  the  de- 
cline in  the  wholesale  prices  of  most  of  the  staple  commodi- 
ties of  the  world's  commerce  has  been  extraordinary,  and 
has  extended  to  most  countries ;  and  that  the  estimate  of 
M.  Sauerbeck  (before  referred  to)  of  thirty-one  per  cent,  as 
the  average  measure  or  extent  of  this  decline,  is  not  ex- 
cessive. 

It  seems  almost  unnecessary  to  remark  that  a  fall  of 
prices,  although  commonly  so  considered,  can  not,  in  any 
comprehensive  discussion,  be  regarded  as  in  any  sense  a  pri- 

*  The  objections  inherent  in  this  system  have  been  forcibly  illustrated  by 
a  recent  occurrence,  to  which  attention  has  been  called  by  the  "  New  York 
Commercial  Bulletin "  :  Thus,  a  comparison  of  index  numbers  for  January 
and  July,  1886,  and  for  January,  1887,  as  deduced  from  the  "Economist's" 
tables  of  prices,  indicated  a  small  advance  for  the  latter  month  in  the  general 
level  of  British  prices.  But  the  first  article  on  the  "Economist's"  list  of 
prices  is  coffee,  which  advanced  from  July  1,  1886,  to  January,  1887,  to  a  de- 
gree sufficient  to  alone  add  50  to  the  index  number  of  January ;  while  the 
entire  increase  for  the  whote  twenty-two  articles  was  only  36  ;  or,  in  other 
words,  if  coffee  alone  were  omitted  from  the  list  of  articles  compared,  the  net 
result  would  show  an  apparent  decline  instead  of  any  advance  in  the  general 
level  of  prices.  "  Certainly,"  as  the  "  Commercial  Bulletin"  remarks,  "it 
is  difficult  to  attach  much  importance  to  results  having  no  better  basis  than 
this.  For  coffee  is  by  no  means  one  of  the  most  important  articles  compared ; 
it  is  greatly  exceeded  in  importance  by  at  least  twelve  of  them.  But  the 
change  in  that  one  article  happens  to  have  been  surprisingly  great,  and  it 
thus  outweighs  far  more  important  changes  in  other  articles,  such  as  iron  or 
meats." 


CAUSES  OF  RECENT  DECLINE  OF  PRICES.        123 

mary  cause  of  economic  disturbances ;  but  that  here  again 
something  antecedent  in  the  nature  of  causes,  more  or  less 
general,  must  be  sought  for  in  explanation.  What  these 
causes  or  agencies  have  been,  how  they  have  acted,  and  what 
disturbing  influences  they  have  exerted  on  the  world's  prices, 
on  the  world's  industries,  commerce,  and  consumption,  and 
on  pre-existing  relations  of  labor  and  capital,  will,  when 
fully  told,  constitute  one  of  the  most  important  and  inter- 
esting chapters  of  political  economy  and  commercial  history. 
Such  a  complete  statement,  for  lack  of  sufficiently  reliable 
and  comprehensive  data,  can  not  now  be  made  ;  or,  in  other 
words,  the  time  for  making  it  has  not  yet  come.  And  in 
default  thereof  it  is  sufficient  for  the  present  to  say,  that  all 
economists  and  financial  authorities  have  substantially  agreed 
that  while  many  circumstances  may  and  doubtless  have  been 
contributory,  the  extraordinary  movements  in  prices  under 
consideration  must  in  the  main  be  referable  to  one  of  two 
causes :  First,  a  great  multiplication  and  cheapening  of 
commodities  through  new  conditions  of  production  and  dis- 
tribution, which  in  turn  have  been  mainly  (but  not  exclu- 
sively) due  to  the  progress  of  invention  and  discovery ;  and, 
second,  that  the  precious  metal  used  for  standard  money, 
viz.,  gold,  has,  through  relative  scarcity,  owing  to  dimin- 
ished production  and  increased  demand,  greatly  appreciated 
in  value ;  in  consequence  of  which  a  given  amount  of  gold 
buys  more  than  formerly,  or,  what  is  the  same  thing,  the 
price  or  purchasing  power  of  commodities,  in  comparison 
with  gold,  has  fallen. 

As  to  which  of  these  two  causes  has  been  most  influ- 
ential, the  best  authorities  who  have  investigated  the  subject 
widely  differ.  It  is  also  well  recognized  that  the  determina- 
tion of  this  question  is  almost  fundamental  in  the  so-called 
bimetallic  controversy ;  the  plea  for  an  increased  use  of  sil- 
ver as  money  being  wholly  predicated  on  an  alleged  insuffi- 
ciency in  the  supply  of  gold  for  effecting  the  world's  ex- 
changes, while  ample  evidence  of  the  scarcity  of  gold  is 


124  RECENT  ECONOMIC  CHANGES. 

claimed  to  be  found  in  the  remarkable  fall  of  prices  which 
has  been  recently  experienced. 

Preliminary  to  entering  upon  any  review  of  this  vexed 
question,  a  consideration  of  the  following  general  propo- 
sitions may  possibly  help  to  a  determination  of  opinion  in 
respect  to  it:  First.  It  is  a  universally  accepted  canon, 
alike  in  logic  and  common  sense,  that  extraordinary  and 
complex  agencies  should  never  be  invoked  for  the  explana- 
tion of  phenomena,  so  long  as  ordinary  and  simple  ones  are 
equally  available  and  satisfactory  for  the  same  purpose. 
Second.  The  most  natural  presumption,  and  the  one  which 
the  commercial  world  most  readily  accepts,  is,  that  when  an 
article  under  free  competition  declines  in  price,  the  supply 
has  outrun  the  demand ;  not  of  demand  in  the  abstract,  for 
in  a  certain  sense  there  is  no  limit  to  the  demand  for  useful 
and  desirable  things,  but  of  demand  at  the  pre-existing 
price.  If  this  presumption  is  not  correct,  then  the  hitherto 
universally  accepted  influence  of  the  law  of  supply  and  de- 
mand on  prices  has  been  entirely  misunderstood,  and  belief 
even  in  any  such  law  may  as  well  be  abandoned.  On  the 
other  hand,  if  the  presumption  is  correct,  then  any  cause, 
other  than  a  disturbance  of  pre-existing  relations  of  supply 
and  demand,  capable  of  occasioning  a  decline  in  prices,  must 
of  necessity  be  an  extraordinary  one,  and  demanding  evi- 
dence, not  general,  but  specific  and  clear  in  the  highest  de- 
gree, as  a  prerequisite  to  a  belief  in  its  actual  occurrence 
and  influence.  Now,  as  to  the  character  of  the  evidence 
that  can  be  adduced  in  support  of  the  two  great  causes  re- 
spectively to  which  the  decline  in  prices  has  been  mainly 
attributed,  it  is  not  to  be  denied  that  the  evidence  pertain- 
ing to  the  first  can,  either  with  or  without  statistics,  be 
stated  with  precision ;  while  the  evidence  pertaining  to  the 
second  is  at  best  indefinite,  and  mainly  conjectural.  In 
other  words,  the  "  HOW  of  the  depression  of  prices,"  as  Prof. 
Lexis,  of  Gottingen,  has  happily  expressed  it,  through  a 
lowering  of  the  cost  of  production  and  transportation,  and  a 


PRICE  EXPERIENCES  OF  COMMODITIES.          125 

widening  of  the  area  of  cultivation,  is  clear  to  all ;  but  the 
how  of  the  effect  of  the  enhancement  in  value  of  one  de- 
scription of  money  no  one  has,  thus  far,  proved  to  us  in 
concrete,*  If  any  one  "  affirms  a  connection  between  the 
prevalent  low  prices  and  the  assumed  appreciation  of  gold 
arising  from  scarcity,  let  him  explain  the  modus  operandi  ; 
let  him  set  forth  the  process  of  reasoning ;  the  motive  which 
impels  a  seller  to  accept,  except  upon  the  issue  of  the  strug- 
gle between  supply  and  demand,  a  lower  price  for  his  goods 
in  the  face  of  an  abundance  of  capital  and  a  low  rate  of 
interest."  f 

With  these  premises,  attention  is  next  asked  to  the  evi- 
dence confirmatory  of  the  predominating  influence  of  the 
first  cause,  which  is  to  be  found  in  the  history  of  the  recent 
separate  or  individual  economic  experiences  of  the  world's 
great  staple  commodities ;  J  and  for  the  purpose  of  making 
such  an  exhibit,  it  is  expedient  to  group  such  commodities 
for  consideration  under  two  heads ;  namely,  those  in  respect 

*  "  Least  of  all  has  Mr.  Gibbs  done  so,  although  he  was  examined  long  on 
this  point  [by  the  British  Gold  and  Silver  Commission].  After  all,  he  had  no 
argument,  except  that  the  formation  of  prices  depends  on  the  quantity  of  com- 
modities, and  on  the  quantity  of  money  as  compared  with  those  commodities. 
Hence  if  the  quantity  of  money  diminishes,  prices  must  fall ;  as  if  the  quan- 
tity of  money  stands  like  a  dead  mass  over  against  the  commodities  ;  as  if  the 
efficient  purchasing  power  did  not  appear  only  to  the  slightest  extent  at  the 
present  day,  except  in  the  form  of  cash  money  ;  as  if  in  almost  every  instance, 
in  which  the  debtor  possesses  the  necessary  circulating  or  personal  property, 
the  employment  of  real  money  in  payment  may  not  be  avoided.  In  England, 
as  compared  with  France,  perhaps  twice  the  quantity  of  goods  are  sold  every 
year ;  although  the  former  country  has  less  than  one  half,  perhaps  less  than 
one  third,  of  the  quantity  of  money  to  be  found  in  the  latter." — PROF.  LEXIS, 
of  Gottingen,  Review  of  the  Report  of  the  British  Gold  and  Silver  Com- 
mission. 

t  Paper  by  Lord  Addington,  a  Director  of  the  Bank  of  England  ;  final 
report  (British)  "  Gold  and  Silver  Commission,"  p.  211. 

\  "  A  general  movement  in  prices  is  the  resultant  of  a  number  of  particular 
movements,  and  in  these  particular  movements,  again,  we  find  the  proximate 
causes  of  the  distribution  of  the  industrial  forces  of  the  world  and  of  the 
wealth  which  these  forces  create." — PBOF.  J.  S.  NICHOLSON,  Prof  essor  of  Politi- 
cal Economy,  University  of  Edinburgh,  etc. 


126  RECENT  ECONOMIC  CHANGES. 

to  which  the  evidence  that  decline  in  price  has  been  the 
direct  resultant  of  new  conditions  of  production  and  distri- 
bution is  full,  clear,  and  unimpeachable ;  and  those  in  re- 
spect to  which,  through  lack  mainly  of  universally  accepted 
statistical  data,  the  evidence  is  more  or  less  inferential  or 
circumstantial.  Under  the  first  group  would  be  comprised 
sugar,  petroleum,  or  mineral  oils,  copper,  iron,  quicksilver, 
tin,  tin-plates,  niclcel,  lead,  coal,  quinine,  paper,  rags,  chemi- 
cals, meats,  cheese,  fish,  and  freights  ;  under  the  second, 
wheat,  cotton,  wool,  silk,  jute. 

SUGAR. — Adopting  this  grouping,  the  commodity  whose 
recent  economic  experience  will  be  first  related  will  be 
sugar  ;  which,  commencing  to  decline  in  price  in  1880-'81, 
fell  to  lower  rates  in  1887  than  has  ever  been  known  in  the 
history  of  modern  commerce ;  the  wholesale  price  of  fair  re- 
fining sugars  having  been  more  than  one  hundred  and  four- 
teen per  cent  higher  in  1880  than  in  the  first  half  of  the 
year  1887.* 

Now,  while  improved  methods  of  manufacture  and 
greater  and  cheaper  facilities  for  transportation  have  un- 
doubtedly contributed  to  such  a  result,  it  has  been  mainly 
due  to  an  apparent  desire,  as  M.  Leroy-Beaulieu  has  ex- 
pressed it,  on  the  part  of  the  Governments  of  France,  Ger- 
many, Austria,  Belgium,  Holland,  Italy,  and  Eussia,  "  to 
make  their  national  sugar  industry  the  greatest  in  the 
world  "  by  stimulating  the  domestic  production  of  this  com- 
modity by  the  payment  of  what  is  equivalent  to  extraor- 
dinary bounties  on  its  exportation  to  other  countries ;  or,  in 
other  words,  by  competing  with  one  another  in  paying  large 


*  How  continuous  and  regular  was  the  decline  in  the  price  of  sugars  is 
shown  by  the  following  table,  which  exhibits  the  average  ijrice  of  fair  refining 
sugars  in  bond  (or  free  of  duty)  in  New  York  from  1880  to  July,  1887,  in- 
clusive : 

1880,  5-08  cents.  1885,  3-06  cents. 

1882,  4-53  cents.  1886,  2*92  cents. 

1884,  3-31  cents.  1887  (lowest  to  July),  2-37%  cents. 


SUGAR.  127 

sums  for  the  purpose  of  speedily  getting  rid  of  one  of  the 
most  valuable  and  highly-desired  products  of  the  earth  con- 
joined with  human  industry.* 

On  the  other  hand,  in  order  to  neutralize  to  some  extent 
the  exceptional  advantages  enjoyed  through  such  an  eco- 
nomic policy  by  the  producers  of  beet-sugar  in  Europe,  some 
of  the  cane-growing  countries  have  felt  obliged  to  encourage, 
by  subsidies  or  tax-exemptions,  their  own  sugar-production. 
In  both  Brazil  and  the  Argentine  Eepublic  the  manufactur- 
ers of  cane-sugar  have  obtained  a  guarantee  from  the  state 
of  a  five  to  six  per  cent  return  on  their  capital  invested, 
while  all  the  machinery  needed  in  this  industry  may  be  im- 

*  The  payment  of  direct  bounties  in  Europe  for  stimulating  the  produc- 
tion of  sugar  is  now  and  always  has  been  an  exception,  and  the  existing 
system,  as  a  matter  of  fact,  has  grown  up  from  the  repayment,  on  the  exporta- 
tion of  sugars,  of  an  excise  duty  which  had  been  charged  upon  them.  But  this 
repayment  in  reality  constitutes  a  bounty  "  in  its  primitive  and  most  insidious 
form.  Let  us  suppose  that  one  hundred  tons  of  beet-root  have  been  esti- 
mated, for  purposes  of  taxation,  as  yielding  eight  tons  of  sugar,  and  that  the 
duty  has  been  fixed  on  that  basis.  If,  by  improved  manipulation,  from  this 
amount  of  beet-root  are  extracted  ten  tons,  the  extra  two  tons  will,  if  con- 
sumed in  the  country,  pay  no  excise  duty  whatever ;  but,  if  they  are  exported, 
the  duty  which  all  home  sugar  is  supposed  to  have  paid  will  be  returned.  The 
money  given  back  as  duty  returned  on  the  two  tons  which  did  not  pay  any 
duty,  is  a  bounty. 

"  It  is  obvious  that  this  repayment  of  unpaid  duty  forms  a  substantial  help 
to  the  sugar-trade.  It  is  not  merely  so  much  cash  given  as  a  present  to  the 
producer,  but  it  is  a  great  incentive  to  the  manufacturer  to  select  the  richest 
roots  to  make  his  sugar  from,  and  to  exercise  his  ingenuity  in  extracting  the 
fullest  possible  yield  from  the  beets.  He  only  pays  on  an  estimate  of  eight 
tons  of  sugar  from  a  hundred  tons  of  beets.  He  will  not  be  satisfied  with  the 
two  tons  in  excess  of  this ;  he  will  torture  his  invention  to  squeeze  eleven  or 
even  twelve  tons  of  sugar  out  of  his  measure  of  beets,  and  the  more  he  makes 
the  greater  the  direct  gift  he  receives  from  the  Government  on  exportation. 
Germany  is  a  striking  instance  of  this,  since  during  the  last  ten  years,  through 
the  improvement  in  machinery,  the  average  yield  of  sugar  has  increased  from 
eight  tons  to  nearly  twelve  on  every  hundred  tons  of  roots.  To  the  ordinary 
tax-payer  in  Germany  thia  is  not  altogether  a  matter  of  congratulation,  since 
out  of  a  large  revenue  collected  as  excise  the  state  regularly  pays  back  about 
four  fifths  in  the  form  of  export  bounties,  with  a  result  that  the  sugar  is  im- 
mensely cheapened — not,  however,  to  the  German,  but  to  the  foreign  con- 
sumer." 


128  RECENT  ECONOMIC  CHANGES. 

ported  free  of  duty.  In  the  Spanish  West  Indies  the  home 
Government  has  (1887)  felt  compelled  to  relinquish  the  ex- 
port duties  on  sugars — the  produce  of  Cuba  and  Porto  Eico 
— which  have  long  been  regarded  as  almost  indispensable  on 
account  of  revenue  necessities ;  while  in  South  Africa  and 
Australia  the  production  of  sugar  has  also  been  encouraged 
to  such  an  extent  that  both  of  these  countries  will  hereafter 
be  undoubtedly  included  among  the  number  of  important 
sugar-exporting  regions.  In  Central  America,  the  British 
and  Dutch  West  India  Islands,  Guiana,  and  India  (which 
last  produces  more  sugar  than  any  other  country),  produc- 
tion has  not  as  yet  been  artificially  encouraged,  and,  with 
the  exception  of  the  levying  of  export  taxes  in  certain  lo- 
calities, neither  have  any  impediments  been  placed  in  the 
way  of  the  natural  growth  of  production.  But  at  the  same 
time  it  can  not  be  doubted  that  the  recent  increased  facili- 
ties for  transportation  and  communication  have,  as  before 
pointed  out,  been  in  the  nature  of  a  stimulus  to  the  produc- 
tion of  sugar,  in  common  with  all  other  commodities,  and 
have  opened  up  large  and  fertile  sections  of  the  earth  which 
a  quarter  of  a  century  ago  were  practically  inaccessible. 

Under  such  conditions  the  increase  in  the  production  of 
sugar  entering  into  the  world's  commerce  and  available  for 
general  consumption  has  been  extraordinary.  Mr.  Sauer- 
beck estimates  the  increase  from  1872-'73  to  1885-'86  to 
have  been  sixty-eight  per  cent.  Other  authorities  estimate 
the  increase  from  1853  to  1884,  exclusive  of  the  product  of 
India  and  China,  to  have  been  at  the  rate  of  thirty  per  cent 
for  each  decade,  or  about  one  hundred  per  cent  compounded. 
Between  1882-'83  and  1888-'89  inclusive  the  increase  was 
in  excess  of  twenty-three  per  cent.  In  the  Hawaiian  Islands, 
where  a  remission  of  duties  on  sugars  exported  to  the  United 
States  is  equivalent  to  an  export  bounty  of  about  eighty-five 
per  cent  (and  amounting  for  the  year  1888  to  over  $6,000,- 
000),  the  domestic  production  of  sugar  has  increased  from 
about  12,000  tons  in  1875  (the  year  before  the  duties  were 


EXPORT  BOUNTIES  ON  SUGAR.  129 

remitted)  to  114,000  tons  in  1888,  an  increase  (nine  hun- 
dred per  cent)  that  has  no  parallel  in  the  history  of  the  sug- 
ar industry.  The  part  that  beet-root  sugar  has  played  in 
this  increase  is  shown  by  the  circumstance  that  while  in 
1860  the  proportion  of  this  variety  to  the  whole  sugar-prod- 
uct of  the  world  was  less  than  twenty  per  cent,  its  product 
for  1886-'87  was  estimated  as  about  fifty-six  per  cent ;  Ger- 
many alone  having  increased  her  product  from  about  200,- 
000  tons  in  1876  to  594,000  tons  in  1880-'81,  and  to  1,155,- 
000  tons  in  1884- '85,  while  the  increase  of  the  beet-sugar 
product  in  the  other  bounty-paying  states  of  Europe  was 
not  disproportionate. 

Of  this  extraordinary  increase  of  product,  as  large  a  pro- 
portion as  foreign  markets  would  take  was,  as  a  matter  of 
course,  exported  in  order  to  obtain  the  benefit  of  the  Gov- 
ernment bounties  on  exports,  the  sugar-export  of  Germany 
alone  increasing  from  about  500,000  hundred-weight  in 
1876  to  over  6,000,000  hundred-weight  in  1885,  and,  with 
every  increase  of  exportation,  the  Government  disburse- 
ments on  account  of  export  bounties  increased  propor- 
tionately. The  export  bounty  paid  by  Russia  is  estimated 
to  have  been  as  high  at  one  time  as  $31.25  (£6  8s.)  per  ton, 
and  that  of  France  at  between  $35  and  $40  (£7  and  £8), 
representing,  in  the  case  of  the  latter  country,  an  estimated 
money  loss  to  the  treasury  and  a  bounty  to  the  manufact- 
urer of  43,955,000  francs  in  1886  and  92,077,000  francs 
($18,555,000)  in  1887.  In  1887  the  French  Government 
somewhat  reduced  the  bounty,  but  the  margin  left  to  the 
manufacturer  is  still  very  effective. 

In  Germany  the  amount  paid  in  the  way  of  subsidies  on 
sugar  was  estimated  by  Deputy  Gehlert,  in  a  speech  in  the 
German  Reichstag  in  1886,  as  having  up  to  that  time  ap- 
proximated $40,000,000,  while  for  the  year  1887-'88  about 
$7,000,000  it  was  claimed  would  be  necessary,  or  an  amount 
equal  to  the  total  wages  paid  to  all  workmen  in  all  the  Ger- 
man sugar-refineries.  As  might  also  have  been  expected, 


130  RECENT  ECONOMIC  CHANGES. 

the  profits  of  producers,  and  more  especially  of  the  sugar- 
refiners,  working  under  the  bounty  (export)  system,  were  at 
the  same  time  enormously  increased.  In  Germany  the 
largest  and  best-managed  beet-sugar  manufactories  divided 
for  a  series  of  years  dividends  to  the  extent  of  sixty,  seventy, 
ninety,  and  in  one  instance  one  hundred  and  twenty-five 
per  cent  per  annum  on  the  capital  invested,*  and  correspond- 
ing results  were  also  reported  in  Austria,  Eussia,  France, 
and  Belgium.  How  rapidly  and  extensively  sugar  has  de- 
clined in  price  consequent  upon  such  an  extraordinary  and 
unnatural  increase  in  production  has  already  been  pointed 
out.  How  much  of  disaster  this  decline  has  brought  to  great 
business  interests  and  to  the  material  prosperity  and  even 
the  civilization  of  large  areas  of  the  earth's  surface,  will  be 
made  a  subject  of  future  notice,  f 

During  the  year  1888  a  marked  change  occurred  in  the  supply  and 
prices  of  sugars.  The  beet-root  manufacturers  on  the  Continent  of 
Europe,  alarmed  at  an  apparent  glut  of  the  sugar  market,  reduced 

*  "  By  a  law  passed  in  1869  it  was  assumed  that  it  took  12J^  centners  of 
beet-roots  to  give  one  centner  of  crude  sugar,  and  a  tax  was  levied  on  this 
basis  and  a  corresponding  drawback  allowed  on  exported  sugar.  Since  then 
great  improvements  have  been  made  in  the  process  of  manufacturing,  so  that 
but  10)^  centners  of  roots  are  necessary  to  produce  one  centner  of  sugar  instead 
of  12J^  as  formerly ;  but  the  Government  continued  to  grant  a  drawback  on  the 
basis  of  12J^.  The  export  drawback  thus  became  an  enormous  premium  to 
the  producers,  and  the  German  manufacturers  have  been  enabled  to  supply  all 
Europe  with  cheap  sugar ;  till,  to  protect  themselves,  the  other  states  have 
had  to  increase  their  duties  on  the  imports  of  foreign  sugar." — Report  to 
United  States  Department  of  State  by  Commercial  Agent  SMITH,  Mayence, 
January,  1887. 

t  "  It  has  almost  bankrupted  the  sugar-producing  interests  in  the  West  In- 
dies and  the  Dutch  East  Indies,  and  threatens  the  continuance  of  productive 
industries  and  even  of  civilization  in  these  countries.  In  consequence  of  the 
low  prices  of  sugar  in  Europe  and  America,  owners  of  plantations  and  their 
lessees  have  speculated  to  such  an  extent  that  they  have  placed  themselves  on 
the  brink  of  an  abyss,  and  it  is  feared  that  this  will  totally  stop  the  production 
of  sugar  in  Java.  This  event  would  in  every  way  be  a  great  catastrophe.  It 
would  at  once  throw  half  a  million  of  Javanese  laborers  out  of  employment, 
who  would  increase  the  already  enormous  number  of  Malay  pirates." — Jour- 
nal des  Fabricants  de  Sucre,  October,  1886. 


PETROLEUM   (MINERAL  OIL).  131 

production.  The  world's  population  and  consumption  continued  to 
increase,  and  the  stock  of  raw  sugars  at  the  principal  markets  of  the 
world  rapidly  decreased,  the  stock  at  the  port  of  London  being  re- 
ported, for  example,  as  comparatively  smaller,  at  the  close  of  the  year 
1888,  than  at  any  former  period.  As  a  consequence,  prices  everywhere 
materially  advanced.  An  interesting  feature  of  the  world's  sugar- 
supply  in  1888  was  the  change  in  the  relative  proportions  of  cane  and 
beet,  the  result  of  a  reduced  beet-crop  on  the  Continent  of  Europe. 
Taking  the  British  Board  of  Trade  returns  as  a  standard,  the  impor- 
tations of  beet-sugar  into  Great  Britain  for  1888  as  compared  with 
1887  decreased  278,000,000  pounds,  but  with  an  increase  in  price. 
Cane-sugars,  mainly  the  product  of  Java  and  the  British  West  Indies, 
immediately  flowed  in  to  nearly  supply  the  deficiency. 

PETROLEUM  (MINERAL  OIL). — The  economic  history  of 
petroleum  and  its  principal  derivative,  kerosene-oil,  since 
the  year  1872,  is  in  many  respects  more  interesting  and  re- 
markable than  that  of  any  other  staple  commodity,  because 
the  decline  in  its  price  has  been  absolutely  greater  than  in 
the  case  of  any  other  article,  and  the  agencies  which  have 
been  concerned  in  producing  such  a  result  are  capable  of 
statement  with  accuracy  and  completeness. 

In  the  first  place,  the  annual  product  of  crude  petroleum 
in  the  United  States — the  chief  source  of  supply — increased 
from  9,893,786  barrels  in  1873  to  28,249,597  in  1887.  The 
price  of  crude  oil  during  this  period  declined  from  9-42 
cents  to  1-59  cents  per  gallon,  and  of  refined  oil  from  23-59 
cents  to  6f  cents  per  gallon.  The  decline  in  the  price  of 
crude  oil  was  unquestionably  due  to  its  enormous  supply, 
which  at  one  time  amounted  to  nearly  100,000  barrels  per 
day,  "  while  the  stock  of  crude  oil  rose  from  3,500,000  bar- 
rels in  1876  to  the  stupendous  figures  of  41,000,000  barrels 
in  1884."  Had  refined  oil  declined  only  at  the  same  rate,  its 
minimum  price  would  have  been  15 '75  cents  per  gallon. 
But  the  fall  in  refined  oil  has  been  9-01  cents  per  gallon 
greater  than  the  fall  in  crude  oil ;  and  as  over  1,000,000,000 
gallons  were  consumed  in  1887,  this  saving  of  9-01  cents 
per  gallon  to  the  public  amounted  to  nearly  $100,000,000 


132  RECENT  ECONOMIC  CHANGES. 

for  that  same  year.  Here,  then,  some  agency  other  than  in- 
creased supply  and  diminished  cost  of  the  crude  oil  has  un- 
questionably come  in  and  operated  to  reduce  the  price  of  a 
manufactured  product  in  a  given  period  disproportionally 
to  that  experienced  by  the  raw  material  from  which  it  was 
derived.  What  was  that  agency?  Did  any  concurrent 
change  in  the  relative  values  of  the  precious  metals  used  as 
money  contribute  in  any  degree  toward  effecting  such  a  re- 
sult? It  is  claimed,  and  without  doubt  correctly,  to  be 
largely  due  to  the  fact  that  the  whole  business  of  refining 
petroleum  in  the  United  States  and  the  distribution  of  its 
resulting  products  has  gradually  passed,  since  1873,  into  the 
ownership  and  control  of  a  combination  or  "trust" — the 
Standard  Oil  Company — which,  commanding  millions  of 
capital,  has  used  it  most  skillfully  in  promoting  consump- 
tion, and  in  devising  and  adopting  a  great  number  of  ingen- 
ious methods  whereby  the  cost  of  production  has  been  re- 
duced to  an  extent  that,  at  the  outset,  would  not  have  seemed 
possible.  The  methods  in  detail  by  which  this  "trust" 
has  achieved  results  in  the  way  of  reducing  prices  which 
find  no  parallel  in  the  history  of  industry  have  been  thus 
recently  told  by  one  of  its  principal  managers : 

"  1.  They  have  used  capital,  which  only  a  large  combina- 
tion could  use,  in  opening  markets  for  petroleum  through- 
out the  civilized  and  uncivilized  world.  Through  their  ex- 
ertions it  is  now  used  wherever  steamers,  or  vessels,  or  cars, 
or  carts,  or  camels,  or  coolies  can  carry  it.  The  exports 
from  the  "United  States  have  been  in  excess  of  $44,000,000 
per  annum  in  value.  The  value  of  the  domestic  consump- 
tion is  much  greater,  and  from  this  immense  output  at  low 
prices  great  aggregate  gains  have  been  realized  from  small 
profits. 

"  2.  By  using  capital  in  cheapening  methods  of  trans- 
portation, building  cars  for  carrying  oil  in  bulk,  erecting 
tank  stations  for  holding  oil  in  bulk,  and  constructing  pipe- 
lines, or  lines  by  which  the  crude  oil  is  transmitted  hun- 


THE  STANDARD  OIL  COMPANY.  133 

dreds  of  miles,  with  great  rapidity  and  at  small  expense,  by  a 
system  of  underground  pipes.  In  this  way  the  rate  of  trans- 
portation has  been  reduced  about  two  thirds  in  fourteen 
years,  a  saving  of  not  far  from  $20,000,000  per  year. 

"  3.  All  the  persons  concerned  in  the  management  of 
the  combination  (or  "  trust ")  have  the  benefit  of  combined 
knowledge  and  experience,  and  the  best  and  cheapest  meth- 
ods of  manufacture,  as  well  as  the  use  of  patents ;  in  conse- 
quence of  which  the  actual  cost  of  manufacturing  refined 
oil  has  been  reduced  sixty-six  per  cent  in  fourteen  years. 

"  4.  The  same  cheapening  has  taken  place  in  the  manu- 
facture of  barrels,  tin  cans,  boxes  for  inclosing  cans,  paint, 
glue,  and  acids.  The  company  use  3,500,000  barrels  per 
annum.  The  saving  in  cost  of  manufacture  since  1873 
amounts  to  $4,000,000  per  annum.  Thirty-six  million  cans 
are  used  per  year.  The  cost  of  making  has  been  reduced 
about  one  half.  The  saving  amounts  to  $5,400,000  per  an- 
num. The  cost  of  making  wooden  cases  has  been  reduced 
one  third.  The  saving  amounts  to  $1,250,000  per  annum. 
The  public  has  had  the  benefit  of  all  these  savings  in  a 
cheaper  product,  and  it  is  in  this  way  that  the  reduction  of 
former  prices,  equivalent  to  $100,000,000  per  year,  has  been 
effected."  * 

Extremely  low  as  is  the  present  price  of  mineral  oils,  yet, 
with  the  recently  recognized  ability  of  Russia  to  supply  ap- 
parently unlimited  quantities  of  it  at  low  rates,  and  the  de- 
termination of  the  great  American  company,  at  the  same 

*  Although  the  "  trust "  has  undoubtedly  greatly  contributed  to  these 
cheapening  results,  it  would  be  an  error  to  suppose  that  it  is  entitled  to  ex- 
clusive credit  for  the  same.  Thus,  for  example,  the  reduction  of  freights  since 
1873  has  been  universal  for  all  classes  of  commodities — on  the  Pennsylvania 
Railroad  to  an  average  of  fifty-two  per  cent — and  the  improved  methods  of 
manufacturing  barrels,  cans,  etc.,  speedily  came  into  common  use.  It  is  no 
less  certain  that  the  economies  effected  in  the  refining  of  mineral  oils  have  not 
resulted  in  benefiting  consumers  to  anything  like  the  extent  that  was  possible, 
without  interfering  with  the  realization  of  large  profits  by  the  manufacturing 
combination. 
7 


134  RECENT  ECONOMIC  CHANGES. 

time,  to  vigorously  compete  with  the  Russian  product  in  the 
world's  markets,  there  seems  no  probability  that  any  ad- 
vance in  price  is  likely  to  occur  in  the  immediate  future. 

COPPER. — This  metal  touched  the  lowest  price  on  record 
in  1886,  Lake  Superior  copper  in  New  York  falling  from 
twenty-five  cents  per  pound  in  1880  to  nine  and  four  fifth 
cents  in  May,  1886 ;  and  in  the  case  of  only  a  very  few 
commodities  is  the  connection  between  a  decline  in  price 
and  an  increase  of  production  and  supply  so  well  established 
and  so  significant.  The  increase  in  the  copper  product  of 
the  world  is  estimated  by  Mr.  Sauerbeck  to  have  been 
ninety-seven  per  cent  in  the  thirteen  years  from  1873  to 
1885,  inclusive ;  while  according  to  the  report  of  the  United 
States  Geological  Survey,  1886,  the  increase  from  1879  to 
1885  was  nearly  forty-seven  per  cent  (46-8).  The  countries 
which  have  most  notably  contributed  to  this  increased  prod- 
uct have  been  the  United  States,  Spain,  and  Portugal ;  the 
increase  in  the  case  of  the  former  having  been  from  23,000 
tons  in  1879  to  74,053  tons  in  1885 ;  and  in  that  of  the 
latter,  from  32,677  tons  to  45,749  in  the  same  period.  As 
in  all  other  like  cases,  the  disturbing  effect  on  the  industries 
involved — mining  and  smelting — contingent  on  this  rapid 
and  remarkable  fall  of  prices,  was  very  great,  and  in  all 
quarters  of  the  world.  In  Montana,  the  Montana  Copper 
Company,  with  an  annual  product  of  8,000,000  pounds  of 
pure  copper,  entirely  suspended  operations ;  and  the  Ana- 
conda Company,  with  an  annual  product  of  36,000,000 
pounds,  shut  down  twenty  out  of  twenty-eight  furnaces,  and 
discharged  most  of  its  hands  at  the  mine.  In  Chili,  pro- 
duction during  the  year  1885  was  diminished  to  the  extent 
of  about  ten  per  cent.  In  Germany  the  great  Mansfield 
mine,  which  reported  gross  profits  in  1884  of  5,675,000 
marks,  sustained  a  loss  in  the  operation  of  1885  of  653,338 
marks ;  and  its  managers  sought  relief  by  petitioning  the 
Imperial  Government  for  the  imposition  of  a  higher  tariff 
on  the  imports  of  copper  into  the  empire.  For  the  years 


COPPER.  135 

1881-'83  the  great  San  Domingo  mine  in  Portugal  paid 
annual  dividends  of  twelve  and  a  half  per  cent ;  in  1885  the 
annual  rate  was  reduced  to  three  and  three  fourths  per 
cent. 

It  is  important  to  note,  as  throwing .  light  on  this  phe- 
nomenal decline  in  the  price  of  a  great  staple  commodity, 
that  while  the  increase  in  the  product  of  copper  was  admitted 
to  be  immense  and  primarily  influential,  three  other  agen- 
cies may  be  regarded  as  having  concurrently  contributed  to 
this  result : 

The  first  is,  that  there  has  been  a  reduction  in  the  cost 
of  mining,  smelting,  and  marketing  copper  at  the  principal 
mines  of  the  world,  owing  to  improved  processes,  and  re- 
duced rates  of  transportation  contingent  on  railroad  con- 
struction. In  the  case  of  the  Lake  Superior  mines,  this  re- 
duction has  been  very  remarkable ;  thus,  in  one  of  the  lead- 
ing mines,  $5.50  per  ton  was  paid  in  1867  for  stamping  and 
washing ;  in  1876  the  same  processes  cost  only  83-89c.  per  ton, 
and  in  1885  the  expense  had  been  still  further  reduced  to 
47'31c.  Between  1876  and  1885,  in  like  manner,  the  cost 
of  manipulating  the  rock  was  reduced  from  3'45c.  per  ton 
to  l-95c.  For  the  same  concern  the  cost  of  refined  copper 
per  pound  at  the  mine  was  stated  at  15'42c.  in  1876  and 
8£c.  in  1885  ;  and  since  then  there  has  been  further  prog- 
ress in  the  application  of  economical  methods.  The 
annual  report  of  the  "  Tamarack  "  (Lake  Superior)  Com- 
pany for  the  year  ending  June,  1888,  shows  the  total  cost 
of  its  annual  product  of  over  10,000,000  pounds  of  refined 
copper  at  the  mine  to  have  been  3497c.  per  pound.  The  ad- 
dition of  charges  for  smelting,  freight,  commission  and 
office  expenses  brought  up  the  total  cost  per  pound  of  re- 
fined copper,  laid  down  in  New  York  and  sold,  to  5fc.  per 
pound.  This  is  probably  as  cheap  as  any  company  pro- 
duces ;  and  in  comparison  with  1867,  or  even  with  1876  or 
1885,  the  cheapness  of  the  processes  appears  phenomenal. 

Second.  The  recent  discovery  and  rapid  development  of 


136  RECENT  ECONOMIC  CHANGES. 

new  and  rich  mines  in  Montana,  Arizona,  the  Dominion  of 
Canada,  and  elsewhere,  have  engendered  a  feeling  in  the 
metal-trade  that  the  supply  of  copper  is  practically  illimit- 
able. 

Third.  During  the  year  1886  the  previous  decline  in 
prices  was  intensified  by  the  circumstance  that  the  con- 
sumption of  copper  in  Europe  fell  off  14,000  tons  below  the 
average  for  the  two  preceding  years — a  result  attributed 
mainly  to  the  dullness  of  ship-building,  and  the  various 
metal  industries. 

In  short,  the  great  decline  in  the  price  of  copper  sub- 
sequent to  1880  and  down  to  1887  was  mainly  a  normal 
movement,  and  any  advance  in  its  price  since  then  has  been 
in  defiance  of  the  conditions  of  production. 

The  state  of  affairs  for  the  producers  of  copper  up  to 
the  close  of  the  year  1887  was  therefore  a  gloomy  one ;  re- 
lieved only  by  the  circumstance  that  the  low  price  of  this 
metal  tended  to  enlarge  the  sphere  of  its  uses,  and  although 
the  visible  supply  of  copper  had  not  fallen  off  materially, 
it  was  being  generally  recognized  that  consumption  was 
gradually  gaining  on  production,  and  that  the  stocks  of  raw 
material  in  the  hands  of  smelters  and  manufacturers,  and 
of  finished  goods  in  the  hands  of  dealers  and  consumers, 
were  very  greatly  reduced.  The  opportunity  thus  pre- 
sented was  seized  upon,  in  the  autumn  of  1887,  by  the 
Societe  des  Metaux  of  France  to  "  corner "  the  copper 
market,  and  advance  prices.  At  the  outset  it  is  probable 
that  no  very  extensive  operations  were  contemplated,  but 
the  movement  soon  acquired  such  an  impetus  that  those 
who  initiated  it  were  able  to  perfect,  and  for  a  time  success- 
fully carry  out,  a  scheme  for  the  control  of  the  price  and 
supply  of  copper  which  hardly  finds  a  parallel  in  modern 
commercial  experience.  In  the  short  space  of  three  months 
the  syndicate  advanced  the  price  of  copper  more  than  one 
hundred  per  cent — Chili  bars,  which  sold  in  London  on 
the  1st  of  October,  1887,  for  £39  15s.  per  ton,  being  quoted 


THE  COPPER  SYNDICATE.  137 

on  the  1st  of  January,  1888,  at  £85 ;  at  the  same  time  the 
market  price  of  the  shares  of  many  of  the  principal  copper- 
mining  companies  were  greatly  advanced ;  from  seventy  to 
one  hundred  per  cent,  and  to  even  higher  premiums.  These 
high  prices  for  copper  naturally  stimulated  its  production 
everywhere  throughout  the  world ;  new  mines,  which  the 
completion  of  new  lines  of  railroad  had  brought  within 
easy  reach  of  the  market  being  opened,  while  old  mines, 
which  the  competition  of  stronger  companies  had  kept 
partially  undeveloped,  were  worked  to  their  utmost  capaci- 
ty ;  the  total  mining  output  increasing  from  224,000  tons 
in  1887  to  255,000  in  1888.  Indeed,  for  the  latter  year  the 
world's  aggregate  production  is  believed  to  have  surpassed 
the  world's  aggregate  consumption  to  the  extent  of  80,000 
tons,  or  one  third  of  the  year's  product.  Two  other  influ- 
ences also  virtually  contributed  to  greatly  increase  the  sup- 
ply of  copper.  Old  and  scrap  copper,  unavailable  at  eight 
and  nine  cents  per  pound,  became  important  at  sixteen  cents ; 
and  large  quantities  were  collected  and  pressed  upon  the 
market.  Consumers  also  strove  for  the  greatest  economy 
of  material  under  the  higher  prices ;  dispensed  with  the  use 
of  copper  altogether  in  many  cases,  and  in  others  substi- 
tuted different  materials,  especially  zinc  and  iron.  Under 
such  circumstances  the  syndicate  in  March,  1889,  finding 
itself  not  only  with  an  immense  stock  of  metal  which  it 
could  not  sell  at  the  current  prices  which  it  had  established, 
but  also  under  obligations  to  take  at  a  high  price  all  that 
the  leading  mines  of  the  world  could  continue  to  produce 
for  a  lengthened  period,  broke  down,  and  carried  with  it  to 
ruin  the  Societe  des  Metaux  of  France,  and  also  one  of  the 
largest  banking  institutions  of  that  country — the  Comptoir 
d'Escompte — the  price  of  copper  falling  in  less  than  thirty 
days  from  £80  per  ton  to  £35  and  £40  per  ton,  or  to  about 
the  point  before  the  advance  under  the  operations  of  the 
syndicate  began. 

IRON. — Sir  Lowthian  Bell,  recognized  as  one  of  the  best 


138  RECENT  ECONOMIC  CHANGES. 

authorities  on  the  production  of  iron  and  steel,  in  his  testi- 
mony before  the  Royal  British  Commission  on  the  Depression 
of  Trade  in  1885,  estimated  the  increase  in  the  world's  pro- 
duction of  pig-iron  from  1870  to  1884  at  eighty-two  per 
cent.  The  tables  of  the  American  Iron  and  Steel  Associa- 
tion, prepared  by  Mr.  James  M.  Swank,  indicate  an  increase 
in  the  pig-iron  product  of  the  world,  from  1870  to  1886  in- 
clusive, of  about  one  hundred  per  cent.  All  authorities  are 
therefore  substantially  agreed  that  the  increase  in  the  pro- 
duction of  this  commodity  within  the  period  mentioned  was 
not  only  far  in  excess  of  the  increase  of  the  world's  popula- 
tion in  general,  but  also  of  the  increase  of  the  population  of 
the  principal  iron-producing  countries.  This  abnormal  aug- 
mentation of  product  was  not,  however,  equally  distributed 
over  all  the  years  from  1870  to  1886.  From  1870  to  the 
end  of  1879  it  was  very  small,  averaging,  according  to  Mr. 
Bell,  but  about  two  and  a  quarter  per  cent  per  annum ;  but 
after  1879  the  production  of  iron  increased  all  over  the 
world  in  a  most  rapid  and  most  extraordinary  manner — the 
product  of  1880  over  1879  having  been  thirty  per  cent 
greater  in  Great  Britain,  thirty-six  per  cent  in  the  United 
States,  and  thirty-two  per  cent  in  Belgium,  while  in  all 
other  iron-producing  countries  the  increase  in  production 
was  also  very  notable.  The  years  1881,  1882,  and  1883  were 
also  characterized  by  continual  extraordinary  production ; 
so  that  at  the  end  of  the  latter  year  the  annual  product  of 
the  world  was  about  fifty  per  cent  (49*9)  greater  than  in 
1879 ;  the  increase  in  Great  Britain  and  the  United  States 
for  the  same  period  having  been  forty-one  and  sixty-seven 
per  cent  respectively. 

Attention  is  next  asked  to  the  price  experiences  of  iron 
subsequent  to  1870.  In  Great  Britain  the  average  prices 
from  1870  to  1876  rated  high,  and  for  part  of  the  time — 
from  1872  to  1876 — might  be  fairly  characterized  as  extrava- 
gant, and  even  as  famine  prices.  In  the  United  States 
prices  were  also  well  maintained  until  after  1875,  and  the 


PRODUCTION  AND  PRICE  OF  IRON.  139 

reason  for  a  lack  of  greater  correspondence  between  British 
and  American  pig-iron  prices  for  the  period  in  question  is 
undoubtedly  due  to  the  fact  that  the  depression  of  trade, 
which  commenced  in  the  United  States  in  1873  and  pre? 
vailed  with  great  severity  in  1874  and  1875,  did  not  mani- 
fest itself  to  a  corresponding  extent  in  Great  Britain  until 
1876.  After  1877  prices  continued  to  decline  in  both  coun- 
tries, but  not  to  a  greater  extent  than  might  have  been  ex- 
pected, considering  the  extreme  depression  of  trade  which 
had  then  become  almost  universal ;  and  some  descriptions 
of  British  iron,  as  "  Staffordshire  bars,"  were  even  higher  in 
1879  than  in  1870.  In  1880  there  was  a  marked  advance 
in  the  price  of  iron,  both  British  and  American,  but  after 
the  enormous  increase  in  the  world's  product  in  the  years 
1880-'82  had  been  experienced  the  prices  of  iron  began  to 
decline  in  an  extraordinary  manner;  and  in  the  case  of 
some  varieties  touched  in  1885-'86  the  lowest  figures  ever 
recorded.  Thus,  American  anthracite  pig,  which  sold  in 
February,  1880,  for  $41  per  ton,  declined  almost  continu- 
ously until  July,  1885,  when  the  low  point  of  $17f  was 
reached ;  while  in  Great  Britain,  Cleveland  pig,  which  sold 
for  £4  17s.  Id.  in  1872,  and  £2  5s.  in  1880,  declined  to  £1 
10s.  9d.  in  1886.  The  decline  in  Bessemer  steel  rails  in  the 
English  market  was  from  £12  Is.  Id.  in  1874  to  less  than 
£4  in  1887.  In  the  United  States,  Bessemer  steel  rails, 
which  commanded  $58  per  ton  at  the  mills  in  1880,  fell  to 
$28.25  at  the  close  of  the  year  1884,  reacting  to  $39£  in 
March,  1887. 

Reviewing,  specifically,  the  causes  which  contributed  to 
the  above-noted  extraordinary  decline  in  the  prices  of  iron, 
the  following  points  are  worthy  of  notice  : 

First.  The  testimony  of  Sir  Lowthian  Bell  shows  that 
foreign  countries  have  within  recent  years,  and  contrary  to 
former  experience,  increased  their  production  of  iron  in  a 
far  greater  ratio  than  Great  Britain,  which  was  formerly  the 
chief  factor  in  the  world's  supply;  and,  in  consequence, 


140  RECENT  ECONOMIC  CHANGES. 

have  become  formidable  competitors  with.  Great  Britain,  not 
only  in  their  own  territories,  but  also  in  neutral  markets. 
New  fields  of  iron-ore  have  been  discovered  in  Germany, 
France,  and  Belgium,  very  analogous  in  point  of  character 
to  those  which  by  discovery  and  development,  about  the 
year  1850,  in  the  north  of  England,  led  to  the  subsequent 
great  and  rapid  increase  of  British  iron  production. 

Second.  The  power  of  producing  iron  with  a  given 
amount  of  labor  and  capital,  and  the  number  of  establish- 
ments with  great  capacity  for  production,  have,  in  recent 
years,  greatly  increased.  For  example,  the  average  product 
per  man  of  the  furnaces  of  Great  Britain,  which  for  1870 
was  estimated  at  173  tons,  is  reported  to  have  increased  to 
194  tons  in  1880,  and  261  tons  in  1884,  or  fifty-one  per 
cent.*  Between  the  years  1885  and  1888  the  number  of 
furnace-stacks  in  the  five  States  of  Ohio,  Michigan,  Indiana, 
Illinois,  and  Wisconsin,  was  reduced  from  139  to  134,  but 
the  product  of  the  remainder  during  the  same  time  nearly 
doubled. 

Third.  The  substitution  of  steel  for  iron  has  resulted  in 
a  notable  diminution  of  the  consumption  of  iron  for  the  at- 
tainment of  a  given  result,  or,  in  other  words,  more  work  is 

*  The  claim  has  been  made  that  as  the  decline  in  the  prices  of  iron  in 
recent  years  has  been  greater  than  the  improvement  in  the  efficiency  of  the 
labor  engaged  in  producing  iron,  the  inference  is  warranted  that  some  other 
influence  than  the  increased  efficiency  of  labor  must  have  come  in  to  occasion 
such  decline.  A  comparison  of  the  prices  of  the  standard  varieties  of  iron  in 
1870  and  1887,  shows,  however,  some  very  curious  correspondences  between 
the  reduced  prices  and  the  reported  degree  of  increase  in  the  efficiency  of 
labor  within  the  same  period.  Thus,  in  the  United  States  anthracite  pig- 
iron,  which  sold  at  an  average  in  1871  of  $35  per  ton,  had  an  average  price  in 
1885  of  $18.  Cleveland  bars,  which  commanded  £6  19s.  in  1870,  sold  for  £A 
10s.  in  1887.  At  the  same  time  nothing  is  more  certain  than  that  a  great  many 
other  considerations  than  immediate  labor  cost  enter  into  and  determine  the 
market  prices,  not  only  of  iron,  but  of  all  other  commodities.  In  the  case  of 
American  wheat,  for  example,  the  evidence  is  indisputable  that  its  cost  in  the 
Liverpool  market  has  been  reduced  to  the  extent  of  thirty  cents  a  bushel  in 
the  years  from  1870-'72  to  1887,  from  causes  wholly  independent  of  the  effi- 
ciency or  wages  of  the  men  who  produced  it. 


CHANGES  IN  THE  MANUFACTURE  OP  IRON. 

attainable  from  a  less  weight  of  material.  Sir  Lowthian 
Bell,  in  his  testimony  before  the  Royal  British  Commission, 
stated  that  a  ship  of  1,700  tons  requires  seventeen  per  cent 
less  in  weight  of  pig-iron,  in  being  built  of  steel  rather 
than  of  iron,  and  is  capable  of  doing  seven  per  cent  more 
work. 

Again,  the  quantity  of  pig-iron  requisite  for  keeping  a 
railroad  in  repair  will  depend  greatly  upon  the  state  in  which 
iron  enters  into  construction;  rails  of  steel,  for  example, 
having  a  far  greater  durability  than  rails  of  iron.  * 

A  further  example  of  recent  economic  disturbance  con- 
sequent upon  changes  in  the  manufacture  of  iron — charac- 
terized by  the  Secretary  of  the  British  Iron  Trade  Associa- 
tion, in  his  report  for  1886,  as  "  one  of  the  most  remarkable 
of  modern  times  " — is  to  be  found  in  the  rapid  disuse  of  the 
system  invented  about  one  hundred  years  ago  by  Henry 
Cort  for  converting  pig-iron  into  malleable  iron  by  the  so- 
called  process  of  "  puddling."  Twenty  years  ago  the  use  of 

*  Opinions,  as  yet,  vary  greatly  as  to  the  comparative  durability  of  iron 
and  steel  rails.  In  the  testimony  given  before  the  British  Eoyal  Commission, 
Mr.  I.  T.  Smith,  manager  of  the  Barrow  Steel  Company,  gave  it  as  his  opin- 
ion that  the  life  of  a  steel  rail  is  three  times  that  of  an  iron  rail,  adding,  "  My 
reason  for  saying  so  is,  that  I  know  that  upon  the  London  and  Northwestern 
Railroad,  where  steel  rails  have  been  now  in  use  more  than  twenty  years,  they 
consider  it  so." 

Sir  Lowthian  Bell  also,  in  testifying  before  the  commission,  on  the  effect  on 
the  iron-trade  of  Great  Britain  from  the  expected  longer  duration  of  steel  rails, 
says :  "  Assuming  iron  rails  to  last  twelve  and  steel  rails  twenty-four  years, 
instead  of  the  railways  now  in  existence  in  the  United  Kingdom  requiring 
465,648  tons  annually  for  repairs,  232,824  tons  will  suffice  for  the  purpose. 
Although  this  only  involves  the  saving  of  a  comparatively  small  weight  of 
pig-iron,  it  means  less  work  for  rcmelting  and  for  our  rolling-mills,  say  to  the 
extent  of  4,000  to  6,000  tons  per  week."  The  difference  in  duration  of  iron  and 
steel  rails  is  not,  however,  in  itself  a  complete  measure  of  the  amount  of  pig- 
iron  required  for  renewals.  This  arises  from  the  fact  that  an  iron  rail  splits  up 
and  becomes  useless  long  before  the  actual  wear,  as  measured  by  the  diminu- 
tion of  weight,  renders  it  unsafe,  which  often  happens  when  the  loss  of  weight 
does  not  exceed  four  per  cent  of  the  original  weight.  Steel  rails,  on  the  other 
hand,  go  on  losing  weight  until  they  are  from  ten  to  twenty  per  cent  lighter 
than  when  they  were  laid  down,  before  becoming  unsafe. 


U2  RECENT  ECONOMIC  CHANGES. 

this  process  was  almost  universal,  to-day  it  is  almost  a  thing 
that  has  past;  and  the  loss  of  British  capital  invested  in 
puddling-furnaces  which  have  been  abandoned  in  the  ten 
years  from  1875  to  1885  is  estimated  to  have  approximated 
£4,667,000,  or  $23,333,000,  involving  in  Great  Britain  alone 
a  displacement  or  transfer  of  workmen  to  other  branches  of 
industry  during  the  same  period  of  about  39,000. 

After  1883  the  production  of  iron  in  all  iron-producing 
countries  was  for  a  time  notably  restricted ;  the  product  of 
the  United  States,  for  example,  declined  from  4,595,000 
tons  in  1883  to  4,044,000  tons  in  1885,  and  that  of  Great 
Britain  from  8,490,000  tons  to  7,250,657  tons  in  the  cor- 
responding years ;  and  as  the  decline  in  prices  continued, 
and  subsequently  reached  its  extreme  in  1885-'86,  it  has 
been  urged  that  some  other  influences  than  excessive  pro- 
duction must  have  been  influential.*  This  paradoxical  cir- 
cumstance admits,  however,  of  sufficient  explanation.  The 
years  1884,  1885,  and  1886  were  years  of  almost  unprece- 
dented business  depression,  restricting  necessarily  the  uses 
and  demand  for  iron  for  industrial  purposes ;  while  at  the 
same  time  the  capacity  of  every  iron-producing  country  to 
supply  its  domestic  requirements  was  greater  than  ever  be- 
fore. Under  such  conditions  Great  Britain,  which  produces 
about  one  half  of  all  the  iron  and  steel  that  is  made  in 
Europe,  and  more  than  any  other  country  except  Belgium 
depends  on  foreign  markets  to  take  its  surplus  of  these 
products,  found  more  difficulty  than  ever  before  in  dispos- 
ing of  such  surplus.  The  fact  that  the  unsold  stocks  press- 
ing upon  the  markets  of  the  United  States  and  of  Europe 
continued  to  accumulate  during  the  years  1884  and  1885, 
when  production  was  restricted  and  declining,  would  seem 
also  to  be  equivalent  to  a  demonstration  that  no  other  influ- 
ence than  over-production  could  have  operated  at  that  period 
to  occasion  a  continual  decline  in  prices.  Thus,  in  1879 

*  "Financial  Chronicle"  (New  York),  January  21, 1888. 


OVER-PRODUCTION  OF  IRON.  143 

the  unsold  stock  of  all  kinds  of  pig-iron  in  the  United 
States  in  the  hands  of  the  makers  was  only  141,674  tons ;  in 
1881,  210,876 ;  in  1883,  533,800 ;  and  in  1884,  593,000  tons 
(the  report  of  the  American  Iron  and  Steel  Association 
being  authority) ;  while  for  the  United  States  and  Great 
Britain,  conjointly,  Sir  Lowthian  Bell  reports  the  unsold 
stocks  on  hand  at  1,874,000  tons  in  1878,  and  2,404,000  in 
1884 — an  increase  in  these  years  of  528,000  tons.  At  the 
close  of  1885  the  stock  of  unsold  pig-iron  in  Great  Britain 
alone  amounted  to  2,491,000  tons — exactly  fifty  per  cent 
larger  than  the  stock  on  hand  at  the  close  of  1882,  and  the 
largest  that  had,  up  to  that  time,  ever  been  held  in  Great 
Britain  at  the  close  of  any  one  year.  The  unsold  stock  at 
the  close  of  1887  was,  however,  2,616,000  tons,  or  125,000 
larger  than  in  1886. 

In  consequence  of  increased  demand  occasioned  by  ex- 
tensive railroad  constructions,  the  reduction  in  production 
of  pig-iron  which  commenced  in  the  United  States  in  1884 
terminated  in  1885-'86,  since  when  production  has  aug- 
mented in  a  manner  almost  without  precedent,  namely, 
forty  per  cent  in  1886  in  excess  of  1885,  thirteen  per  cent 
in  1887  in  excess  of  1886,  and  eleven  per  cent  in  1888  in  ex- 
cess of  1887,  the  product  for  1888  having  been  the.  largest 
in  the  experience  of  the  country.  The  causes  influencing 
the  increase  in  iron  production  in  the  United  States  in 
1885-'86  not  having  been  concurrently  operative  in  Europe, 
the  revival  there  of  this  industry  was  somewhat  later ;  but 
for  the  United  Kingdom  the  production  for  1887  was  about 
eight  and  a  half  per  cent  over  that  in  1886,  while  for  all 
countries  during  the  same  period  the  increase  has  been  esti- 
mated at  9-6  per  cent. 

With  increased  demand  for  iron,  prices  in  the  United 
States  quickly  advanced — i.  e.,  from  $17.75  per  ton  for  an- 
thracite pig  in  July,  1885,  to  $21.50  in  January,  1887.  As 
production  increased,  however,  prices,  in  harmony  with  pre- 
vious experiences,  again  declined,  and  in  the  first  six  months 


RECENT  ECONOMIC  CHANGES. 

of  1889  American  pig-iron  generally  ruled  at  lower  figures 
than  at  any  former  period. 

QUICKSILVER. — Excepting  petroleum  and  quinine,  the 
decline  in  price  of  this  metal  seems  to  have  been  greater  in 
recent  years  than  that  of  any  other  leading  commodity — i.  e., 
from  £26  per  flask  (the  highest)  on  the  London  market  in 
1874,  to  £5  2s.  6d.  (lowest)  in  1884;  and  from  $118  (high- 
est) to  $26  (lowest)  on  the  San  Francisco  market  during  the 
same  period — a  decline  of  77'1-  per  cent.  The  explanation 
of  this  movement  of  price  is  to  be  found  mainly  in  the  cir- 
cumstance that  California,  which  furnishes  nearly  one  half 
of  the  world's  supply  of  this  metal,  increased  her  production 
from  30,077  flasks  in  1870  to  79,684  in  1877  ;  and  although, 
as  the  result  of  low  prices,  many  of  the  mines  of  California 
subsequently  suspended  operations  and  none  paid  dividends 
in  1885,  the  generally  increased  supply  of  quicksilver,  coupled 
with  its  diminished  use  in  the  reduction  of  silver-ores — con- 
sequent on  the  introduction  and  use  of  cheaper  processes — 
prevented  any  material  augmentation  in  its  price  until 
1886-'87,  when  the  price  advanced  in  the  latter  year  to 
£11  5s.  per  flask  in  London  and  to  $50  in  San  Francisco. 

SILVER. — The  decline  in  the  average  annual  price  of 
bar-silver  per  standard  ounce  in  pence  upon  the  London 
market  has  been  from  59£  in  1873  to  41f  in  May,  1888  (the 
last  being  the  lowest  figure  in  all  history),  a  decline  in  value 
in  relation  to  gold  in  fifteen  years  of  about  thirty  per  cent. 
Notwithstanding  this  great  decline  in  price,  the  annual  pro- 
duction of  silver  during  this  same  period  has  steadily  aug- 
mented, or  from  $64,000,000  in  1873  to  $95,000,000  in  1880, 
$122,000,000  in  1885  and  $135,000,000  in  1887,  an  increase 
in  fifteen  years  of  one  hundred  and  eleven  per  cent.  Such 
a  large  and  constantly  increasing  product  of  silver,  while  its 
price  is  declining,  suggests  a  limitless  supply.* 

*  The  figures  here  given  are  those  reported  by  the  Director  of  the  Mint  of 
the  United  States,  the  value  of  silver  being  taken  at  the  coining  rate  in  the 
United  States  of  silver  dollars  of  $41.56  to  the  kilogramme. 


PRICE  EXPERIENCES  OF  TIN.  145 

TIN. — The  production  and  price  experiences  of  this 
metal  during  the  last  quarter  of  a  century  have  been  very 
curious.  The  world's  consumption  of  tin  from  1860-'64 
constantly  tended  to  be  in  excess  of  production,  and  prices 
rose  from  £87  per  ton  (the  lowest  figure)  in  1864  to  £159  (the 
highest)  in  1873.  In  this  latter  year  the  mines  of  Australia 
began  to  produce  very  largely,  and  in  a  short  time  afforded 
a  supply  equal  to  one  third  of  the  world's  current  consump- 
tion. Under  such  circumstances  the  price  of  tin  rapidly 
declined,  and  in  October,  1878,  touched  £52  10s.,  the  lowest 
price  ever  known  in  history,  a  decline  of  sixty-six  per  cent. 

Subsequently  the  product  of  Australia  declined  and  that 
of  the  "  Straits "  of  Malacca  did  not  materially  increase, 
while  'that  of  England  (Cornwall)  and  other  countries  re- 
mained nearly  stationary.  Meantime  the  consumption  of 
tin  throughout  the  world  continually  increased,  so  that 
prices  advanced  concurrently — i.  e.,  from  £52  10s.  on  the 
London  market  in  1879  to  £105  in  May,  1887.  Eecogniz- 
ing  this  tendency  of,  price  movement,  a  French  syndicate — 
the  Societe  des  Metaux — undertook  to  control  the  mar- 
ket-supply of  the  metal  with  a  view  of  still  further  advanc- 
ing prices,  and  for  a  time  were  so  successful  that  in  Decem- 
ber, 1887,  "  Straits  "  tin  was  quoted  in  London  at  £167  15s. 
As  a  consequence  of  such  inflation,  every  pound  of  tin  that 
could  be  collected  was  placed  on  the  market,  and,  as  at  the 
same  time  consumption  was  greatly  checked,  stocks  accu- 
mulated to  an  unprecedented  amount,  the  year  1887  closing 
with  a  visible  market-supply  full  fifty  per  cent  greater  than 
twelve  months  previous.  The  syndicate  was,  nevertheless, 
enabled  for  some  time  to  maintain  prices  at  an  extremely  high 
level ;  but  in  May,  1888,  the  receipts  of  tin  from  the  "  Straits  " 
having  for  the  previous  five  months  been  increased  by  upward 
of  107,000  hundred-weight  over  the  receipts  of  the  corre- 
sponding period  of  the  preceding  year,  its  ability  to  do  so 
ceased.  The  conditions  of  supply  and  demand  were  too 
much  against  it,  and  in  two  days  the  advance  in  price 


146  RECENT  ECONOMIC  CHANGES. 

which  it  had  taken  six  months  to  engineer  was  lost,  tin  de- 
clining on  the  London  market  within  that  time  from  £166 
($830)  per  ton  to  £77  ($485),  or  over  forty  per  cent.  Subse- 
quently an  even  lower  quotation  of  £76  per  ton  was  reached. 
TIN"  PLATES. — Owing  to  a  tendency  of  consumption  to 
exceed  production,  tin  plates  in  common  with  tin  ruled  at 
what  were  termed  "  famine  "  prices  in  1874,  and  for  some 
years  previous ;  the  average  price  for  "  coke  "  plates  being 
from  26s.  to  27s.  per  ton.  After  1875,  prices  declined 
about  fifty  per  cent ;  or  during  the  year  1887  to  12s.  l^d.  to 
13s.  per  box.  This  remarkable  and  steady  decline  during  a 
period  of  fifteen  years  is  as  clearly  and  certainly  understood 
as  in  the  case  of  tin,  above  noticed,  and  is  referable  to 
three  causes :  First,  the  reduction  in  the  cost  of  the  metal 
tin.  Second,  to  improvements  in  the  manufacture  of  iron, 
and  the  extensive  substitution  of  steel  (plates)  in  place  of 
charcoal  and  puddled-iron  plates.  Third,  to  new  processes 
of  manufacture  and  tinning  ;  a  modern  tin-plate  mill  turn- 
ing out  every  twenty-four  hours  more  than  double  the 
product  of  old-fashioned  mills,  without  any  increase  in 
expenditure  for  motive  power  or  labor.  Supply  and  con- 
sumption alike  under  such  circumstances  have  increased  to 
an  enormous  extent,  and  the  tin-plate  trade,  instead  of 
being  a  minor  industry  of  the  world,  as  was  formerly  and 
not  remotely  the  case,  has  become  one  of  great  magnitude.* 
These  changes  in  the  conditions  of  production  and  prices 


*  An  attempt  on  the  part  of  Germany  to  break  in  upon  the  almost  complete 
monopoly  of  the  manufacture  of  tin  plates  enjoyed  by  Great  Britain,  by  im- 
posing a  heavy  duty  on  their  importation,  has  been  singularly  unsuccessful ; 
domestic  (German)  production  and  exports  having  diminished,  and  exports 
increased,  as  will  appear  from  the  following  table : 


YEAR. 

Production. 

Imports. 

Exports. 

1885  

Tons. 
4  892 

Tons. 
5,798 

Tons. 
186 

1878  

8,582 

5,307 

1,696 

NICKEL  AND  LEAD.  147 

brought,  however,  nothing  of  prosperity  to  the  British  tin- 
plate  manufacturing  industry ;  and  the  period  under  con- 
sideration was  characterized  by  very  many  failures  on  the 
part  of  (South  Wales)  producers. 

NICKEL,  not  many  years  ago,  was  a  scarce  metal  of  lim- 
ited uses,  and  commanded  comparatively  high  prices.  Lat- 
terly the  discovery  of  new  and  cheaper  sources  of  supply 
have  tended  to  throw  upon  the  market  an  amount  in  excess 
of  the  world's  present  average  yearly  consumption — esti- 
mated at  between  800  and  900  tons — and,  as  a  consequence, 
there  has  been  "  over-production,  and  unsatisfactory  prices 
to  dealers."  There  is,  moreover,  little  prospect  that  prices 
in  respect  to  this  metal  will  ever  revive — one  mine  in  New 
Caledonia  (Pacific  Ocean)  alone  being  estimated  as  capable 
of  producing  two  or  three  thousand  tons  annually,  if  re- 
quired; while  the  discovery  of  new  deposits  of  ore  is  fre- 
quently reported. 

LEAD  experienced  a  decline,  comparing  the  highest 
market  prices  in  New  York,  in  January,  1880  and  1885,  re- 
spectively, of  about  thirty-nine  per  cent.  The  world's  produc- 
tion of  lead  since  1876  has  increased  very  rapidly ;  especially 
in  the  United  States ;  the  total  annual  product  of  which  has 
advanced  from  42,540  tons  in  1873,  to  143,957  in  1883,  and 
180,555  in  1888.  One  marked  result  of  this  increase  has 
been  that  the  United  States,  in  place  of  being  as  formerly  a 
large  consumer  of  foreign  lead,  now  imports  but  a  compara- 
tively insignificant  quantity,  namely,  7,035,000  pounds  in 
1888  as  compared  with  72,423,000  pounds  in  1873.  Eich 
and  extensive  mines  of  lead  have  also  in  recent  years  been 
discovered  and  worked  in  Australia. 

The  decline  in  the  price  of  lead,  above  noted,  occasioned 
the  suspension  or  bankruptcy  of  many  English  lead-mining 
companies,  and  during  the  year  1885  much  distress  from 
this  cause  was  reported  as  existing  among  English  lead- 
miners.  The  following  is  an  example  of  another  economic 
disturbance  contingent  on  changes  in  the  production  and 


148  RECENT  ECONOMIC  CHANGES. 

price  of  lead ;  Formerly  the  domestic  supply  in  the  United 
States  of  white-lead  and  of  all  paints,  the  basis  of  which  is 
oxide  of  lead,  was  derived  almost  exclusively  from  manu- 
factories located  upon  the  Atlantic  seaboard  ;  but  with  the 
discovery  and  working  of  the  so-called  silver-lead  mines  of 
the  States  and  Territories  west  of  the  Mississippi,  and  the 
production  of  large  quantities  of  lead  as  a  product  residual, 
or  secondary  to  silver,  the  inducements  offered  for  the 
manufacture  of  white-lead  and  lead-paints,  through  local 
reductions  in  the  price  of  the  raw  material  and  the  saving 
of  freights,  have  been  sufficient  to  almost  destroy  the  former 
extensive  white-lead  and  paint  business  in  the  Eastern 
sections  of  the  United  States,  and  transfer  it  to  the  Western. 

At  present  the  lead  produced  in  silver-mining  consti- 
tutes a  large  proportion  of  the  world's  supply  of  lead ;  and 
most  of  the  mines  of  lead  which  do  not  produce  a  consid- 
erable amount  of  the  more  precious  metal  have  been  aban- 
doned ;  "  or,  in  other  words,  lead  is  now  produced  as  a 
valuable  by-product  in  the  mining  of  silver."  At  the  same 
time  the  industrial  employment  of  lead  is  diminishing, 
other  metals  having  taken  its  place — especially  in  the  con- 
struction of  pipes — to  such  an  extent  that  the  main  use  of 
lead  is  now  for  small  projectiles,  and  for  the  making  of 
paint. 

COAL. — The  decline  in  the  export  prices  of  British  coal, 
comparing  the  average  for  1867-'77  with  1886,  was  about 
thirty-three  per  cent.  In  the  United  States,  although  her 
present  annual  production  of  coal  is  one  fourth  that  of  the 
world,  nothing  reliable  in  the  way  of  average  prices  for  a  se- 
ries of  years  can  be  given ;  inasmuch  as,  through  combina- 
tions of  coal-owners  and  railways,  and  by  reason  of  frequent 
labor  troubles  among  miners,  the  price  of  coal  in  recent 
years  has  rarely  been  determined  by  natural  conditions  and 
has  fluctuated  greatly  from  year  to  year.  Thus,  on  the  1st  of 
January,  1876,  1881,  1882,  and  1885,  respectively,  the  price 
of  mining  100  bushels  of  coal  on  the  railroads  entering  into 


PRODUCTION  AND  PRICES  OF  COAL.  149 

the  city  of  Pittsburg,  Pa.,  was  $2.50,  $3.50,  $4.00,  and 
$3.00 ;  and  the  price  of  coal  at  Pittsburg,  Pa.,  on  the  cor- 
responding dates,  per  100  bushels,  was  $5.50,  $7.00,  $7.50, 
and  $5.50.  Again,  the  decline  in  the  average  annual  price 
of  anthracite  coal  (by  the  cargo  at  Philadelphia),  comparing 
1870  with  1880,  was  thirty-eight  per  cent ;  but,  as  between 
1870  and  1886,  it  was  only  6-6  per  cent. 

According  to  the  returns  of  the  United  States  Geological 
Survey,  there  was  a  gain  in  the  production  of  coal  in  the 
United  States  for  the  year  1886,  as  compared  with  the  ag- 
gregate product  of  1885,  of  1,785,000  short  tons,  but  a  loss 
in  value  at  the  point  of  production  of  $4,419,420.  For  the 
succeeding  year,  1887,  on  the  other  hand,  there  was  a  gain 
of  16.333,000  tons  over  the  product  of  1886,  and  a  gain  in 
value  of  $26,483,000. 

The  increase  in  the  production  and  also  of  the  consump- 
tion of  coal  within  recent  years  constitutes  one  of  the  most 
remarkable  features  in  economic  history.  The  increase  in 
the  product  of  the  five  chief  coal-producing  countries  of  the 
world — Great  Britain,  the  United  States,  Germany,  France, 
and  Belgium — from  1870  to  1886  inclusive,  has  been  in  ex- 
cess of  eighty  per  cent :  Great  Britain  increasing  her  prod- 
uct from  109,000,000  gross  tons  in  1870  to  159,351,000  in 
1885,  and  169,935,000  in  1888 ;  and  the  United  States  from 
38,468,000  tons  in  1870  to  97,000,000  in  1885, 111,000,000  for 
1887,  and  123,000,000  in  1888,  or  eleven  per  cent  in  excess 
of  the  product  of  1887.  In  Germany,  the  increase  reported 
was  from  36,041,000  tons  in  1873  to  55,000,000  in  1883.  In 
1870  the  average  output  of  coal  per  miner  in  the  British 
coal-mines — counting  in  all  the  men  employed — was  250 
tons,  an  amount  never  before  reached.  In  1879  this  average 
had  increased  to  280  tons  per  man  ;*  and  in  1884,  according 


*  See  testimony  of  assistant-keeper  (Meade)  of  the  raining  records  of 
Great  Britain,  "  Second  Report  of  the  British  Commission  on  Depression  of 
Trade,"  1886,  p.  337. 


150 


RECENT  ECONOMIC  CHANGES. 


to  Mr.  J.  S.  Jeans,  Secretary  of  the  British  Iron  Association, 
was  353  tons,*  and  for  the  United  States  374  tons.  For 
Germany,  the  increase  was  from  261  tons  in  1881  to  269 
tons  in  1883 ;  and  in  Belgium,  for  corresponding  years, 
from  165  tons  to  173  tons  per  miner,  while  for  1887  the 
average  product  of  each  coal-mining  hand,  according  to  M. 
Harze,  chief  of  the  Administration  of  Mines,  reached  244 
tons,  or  15  tons  more  than  in  1886. 

Concurrently  with  the  enormous  increase  in  the  produc- 
tion of  coal  and  greater  efficiency  and  economy  in  mining, 
very  much  has  been  done  to  reduce  the  amount  of  coal  for- 
merly used  to  effect  industrial  results ;  for  example,  at  blast- 
furnaces, coal  was  formerly  used  for  heating  the  boilers  that 
furnished  steam  for  blowing,  hoisting,  etc.,  and  for  heating 
the  air  which  was  blown  into  the  stacks.  Now,  a  well- 
ordered  set  of  blast-furnaces  does  not  use  a  single  ounce  of 
coal  except  what  goes  in  to  melt  the  ore.  The  whole  of  the 
heat  used  to  produce  the  steam  required  in  connection  with 
the  furnace,  and  for  heating  the  stoves  for  making  the  hot 
blast,  is  obtained  from  the  gases  which  rise  to  the  top  of  the 
stacks  in  the  process  of  smelting  the  iron,  and  which  for- 
merly was  all  thrown  away.f  The  following  short  table, 
based  on  official  statistics,  from  the  London  "  Economist," 
October,  1888,  shows  the  progressive  economy  in  the  use 
of  coal  for  the  production  of  pig-iron  in  Great  Britain 
during  the  short  space  of  the  three  years  1885,  1886,  and 
1887: 


YEAR. 

Pig-iron. 

Coal  used. 

Per  cent  of  coal. 

1887.. 

Tons. 
7  559  518 

Tons. 
15  304,188 

202 

1886  

7  009  754 

14  249  715 

203 

1885  

7  415  469 

15  287,527 

205 

•  "Journal  of  the  Royal  Statistical  Society,"  1884,  pp.  621,  622. 
t  Testimony  of  J.  D.  Ellis,  chairman  of  John  Brown  &  Co.,  Sheffield, 
British  Commission,  1886. 


ECONOMY  IN  THE  USE  OF  COAL. 

The  displacement  of  finished  iron  by  steel,  which  is  rap- 
idly taking  place,  also  tends  to  reduce  the  consumption  of 
coal ;  while  in  the  manufacture  of  gas,  and  in  all  steam  ap- 
pliances— more  especially  in  marine  locomotion — it  is  well 
known  that  great  economies  in  the  use  of  coal  have  been 
effected,  whereby  it  is  possible  to  do  a  far  greater  amount  of 
work  with  a  given  quantity  of  fuel  than  was  the  case  five  or 
ten  years  ago.  In  the  United  States  a  new  agency  has  come 
in,  namely,  natural  gas,  which  has  been  largely  influential 
in  displacing  the  use  of  coal.  For  the  year  1886  the  amount 
of  coal  thus  displaced  was  estimated  by  the  United  States 
Geological  Survey  at  6,453,000  tons,  valued  at  $6,847,000, 
while  for  1887  the  displacement  was  about  fifty  per  cent 
greater,  or  9,867,000  tons,  having  a  valuation  of  $15,838,000. 
Furthermore,  it  should  not  be  overlooked  that  the  cost  of 
transporting  coal,  which  constitutes  a  most  important  ele- 
ment in  determining  its  price  at  the  point  of  consumption, 
has  been  subject,  both  by  sea  and  land,  to  very  great  reduc- 
tions. 

That  the  world's  consumption  of  coal  during  the  period 
under  consideration  has  progressively  and  enormously  in- 
creased, and  is  still  increasing,  is  not  to  be  questioned,  and, 
in  the  absence  of  any  reliable  data  for  ascertaining  the  rela- 
tions between  the  production  and  consumption  of  this  com- 
modity, great  latitude  of  opinion  on  this  point  is  permis- 
sible ;  but,  at  the  same  time,  the  fact  that  competition  for 
the  supply  of  coal  in  all  the  markets  of  the  world  has  been 
and  is  exceedingly  keen,  goes  far  to  justify  the  current  be- 
lief of  the  trade  everywhere  that  production  has  for  years 
been  augmented  at  a  greater  rate  than  the  demand  war- 
ranted. In  addition,  the  further  facts  that  new,  extensive, 
and  readily  accessible  coal-fields  have  been  and  are  continu- 
ally being  discovered,  that  the  supply  of  coal  is  regarded  as 
practically  inexhaustible,  and  that  the  slightest  increase  of 
demand  is  sufficient  to  speedily  stimulate  production,  would 
of  themselves  seem  to  forbid  the  assumption  that  any  cause 


152  RECENT  ECONOMIC  CHANGES. 

except  change  in  supply  and  demand  could  have  been  influ- 
ential in  determining  the  recent  price  experiences  of  coal. 

COFFEE  AND  TEA. — The  decline  in  recent  years  in  the 
prices  of  each  of  these  great  staple  commodities  has  been 
almost  as  remarkable  as  has  been  the  case  with  sugar — 
coffee  having  touched  the  lowest  prices  ever  known  in  com- 
merce in  the  early  months  of  1886,  the  price  of  "  ordinary," 
or  "  exchange  standard  No.  5,"  having  been  seven  and  a 
half  cents  in  January  of  that  year  in  the  New  York  market ; 
while,  according  to  Mr.  Giffen,  of  the  British  Board  of 
Trade,  the  decline  in  the  price  of  tea,  comparing  1882  with 
1861,  has  been  greater  than  that  of  sugar,  or,  indeed,  of 
almost  any  other  article.  In  both  cases  the  decline  would 
seem  to  find  a  sufficient  explanation  in  a  common  expres- 
sion of  the  trade  circulars,  "  Our  supplies  have  far  outrun 
our  consumptive  requirements."  In  the  case  of  coffee,  the 
total  imports  into  Europe  and  the  United  States,  comparing 
the  receipts  of  the  year  1885  with  1873,  showed  an  increase 
of  fifty-seven  per  cent ;  while  the  increase  in  the  crops  of 
Brazil,  Ceylon,  and  Java  during  the  same  period  has  been 
estimated  at  fifty-two  per  cent.  Subsequently  to  January, 
1886,  the  price  of  coffee,  owing  to  a  partial  failure  of  the 
Brazil  crop,  rapidly  advanced  two  hundred  per  cent ;  "  or- 
dinary "  or  "  exchange  standards  "  having  been  sold  in  New 
York  in  1886  at  twenty-two  cents,  the  highest  point  in  the 
history  of  American  trade,  unless  possibly  during  the  war, 
when  entirely  abnormal  circumstances  controlled  prices. 
From  these  high  prices  there  was  a  subsequent  disastrous  re- 
action and  extensive  failures.  The  advance  in  average  prices 
was,  however,  maintained  in  1887,  and  for  so  long  a  time  that 
the  reduction  in  the  world's  consumption  during  that  year 
was  very  great,  and  for  Europe  was  estimated  at  the  large 
figures  of  77,000  cwts.,  or  over  1,000,000  bags  of  "  Brazil " ; 
while  in  the  United  States  the  reduction  was  believed  to 
have  been  equivalent  to  two  pounds  per  head  of  the  popula- 
tion, or  double  the  total  annual  consumption  of  Great  Britain. 


COFFEE  AND  TEA.  153 

In  the  matter  of  the  supply  of  tea,  the  total  exports  from 
China  and  India  increased  from  234,000,000  pounds  in  1873 
to  337,000,000  pounds  in  ^1885,  or  forty-four  per  cent ;  the 
exports  from  India  having  increased  from  35,000,000  pounds 
in  1879  to  68,000,000  pounds  in  1885 ;  98,000,000  in  1887, 
and  113,000,000  in  1888.*  In  this  latter  year  the  imports 
of  Indian  and  Ceylon  tea  into  Great  Britain  for  the  first 
time  on  record  exceeded  the  imports  of  Chinese  teas ;  and 
herein  we  have  another  striking  example  of  the  inability  of 
unskilled  labor,  or  labor  following  old  processes,  even  at  ex- 
treme low  wages,  to  contend  against  intelligence  and  ma- 
chinery ;  inasmuch  as  the  English  planter  in  India  by  skillful 
cultivation  and  careful  manufacture  with  machinery  is  now 
able  to  place  in  Europe  a  tea  of  good  quality,  and  greater 
strength,  at  a  price  which  the  Chinaman,  with  his  old 
methods,  producing  an  inferior  article,  can  not  afford. 

SULPHATE  OF  QUININE,  a  standard  chemical  prepa- 
ration, used  extensively  all  over  the  world  for  medicinal 
purposes,  affords  another  illustration  of  extraordinary  de- 
clining price  movements  in  recent  years,  which  are  thor- 
oughly capable  of  explanation. 

In  1865  the  highest  price  of  sulphate  of  quinine  in  the 
English  market  was  4s.  4of.  ($1.07)  per  ounce,  which  gradu- 

*  The  British  Chancellor  of  the  Exchequer,  Mr.  Goschen,  in  his  budget 
speech  for  1887,  calls  attention  to  the  following  curious  incident  of  financial 
disturbance  growing  out  of  a  change  in  the  quality  of  tea,  which,  in  turn,  has 
been  contingent  on  a  chaiigc  in  the  locality  or  country  of  its  production : 
"Whereas,  ten  years  ago,"  he  said,  "we  (Great  Britain)  received  156,000,000 
pounds  of  tea  from  China  and  28,000.000  pounds  from  India,  or  184,000,000 
pounds  altogether,  in  1886  we  received  145,000,000  pounds  from  China  and 
81,000,000  pounds  from  India.  In  the  transfer  of  consumption  of  tea  from  the 
tea  of  China  to  that  of  India,  we  have  to  put  up  with  a  loss  of  reveuue  owing 
to  the  curious  fact  that  the  teas  of  India  are  stronger  than  the  teas  of  China, 
and  therefore  go  further,  so  that  a  smaller  quantity  of  tea  is  required  to  make 
the  same  number  of  cups  of  tea."  Mr.  Goschen  further  called  attention  to 
the  fact  that  "  the  fall  in  the  price  of  tea  and  sugar  (in  Great  Britain)  has  been 
BO  great,  that  whereas  in  1 866  a  pound  of  tea  and  a  pound  of  sugar  would  have 
cost  2«.  6d.  and  in  1876  2s.  lid.,  in  1886  they  would  have  cost  only  Is.  7H.,  or 
Zd.  less  than  they  would  have  cost  in  1866  with  all  the  duties  taken  off." 


154:  RECENT  ECONOMIC  CHANGES. 

ally  advanced  to  9s.  %d.  in  1873,  reacting  to  6s.  9d.  in  1876. 
In  the  subsequent  year,  owing  to  an  interruption  in  the  ex- 
portation of  cinchona-bark  from  South  America  by  civil 
war  in  New  Granada,  and  by  lo'w  water  in  the  Magdalena 
Eiver,  the  price  advanced  to  the  unprecedentedly  high  fig- 
ure of  16s.  Qd.  ($4.70)  per  ounce,  receding  to  13s.  in  1879, 
and  12s.  ($3)  in  1880.  In  1883  identically  the  same  article 
sold  in  Europe  for  3s.  6d.  (80  cents)  per  ounce,  in  1885  for 
2s.  6d.,  and  in  1887  to  Is.  6d.  (30  cents)  or  less. 

The  history  of  the  influences  that  have  occasioned  such 
results  is  as  follows :  Formerly  all  cinchona-bark  from  which 
quinine  is  manufactured  came  from  the  forests  of  the  north- 
ern states  of  South  America;  and  as  the  cinchona-trees 
were  not  under  any  system  of  cultivation,  and  as  the  meth- 
ods of  collecting  their  barks  were  wasteful  and  destructive, 
reasonable  apprehensions  began  to  be  entertained,  as  far 
back  as  1855,  that  the  supply  of  this  most  important  natural 
product  would  ultimately,  and  at  no  distant  day,  be  ex- 
hausted. Moved  by  such  considerations  the  English  and 
Dutch  Governments  determined,  therefore,  to  attempt  the 
cultivation  of  the  cinchona-trees  in  India  and  Java,  and 
the  effort  has  proved  exceedingly  successful.  The  first  in- 
stallment of  seeds  and  plants  reached  Ceylon  and  Java  from 
South  America  in  1861,  and  the  first  export  of  bark,  con- 
sisting of  but  twenty-eight  ounces,  took  place  in  1869.  After 
that  the  East  Indian  product  gradually  but  enormously  in- 
creased— Ceylon,  for  example,  exporting  6,925,000  pounds 
in'1882-'83;  11,500,000  pounds  in  1883-'84;  and  15,235,000 
pounds  in  1885-'86.  From  Java  the  exports  have  been 
much  smaller,  but  for  1887  were  in  excess  of  2,200,000 
pounds.  As  the  world  had  never  before  been  supplied  to 
such  an  extent  with  bark,  its  price  rapidly  declined  ;  and  as 
the  cost  of  quinine  is  mainly  determined  by  the  cost  of  the 
crude  material  from  which  it  is  manufactured,  its  extraor- 
dinary price  reduction  followed,  as  has  been  pointed  out. 
Two  other  circumstances  contributed  to  such  a  result :  the 


PAPER  AND  RAGS.  155 

first  is,  that  while  cinchona-barks  from  South  America — the 
product  of  indigenous  trees — yield  on  an  average  not  over 
two  per  cent  of  quinine,  the  bark  of  the  cultivated  tree  in 
the  East  Indies  is  reported  to  yield  from  eight  to  twelve 
per  cent.  A  given  quantity  of  bark,  therefore,  goes  much 
further  in  producing  quinine  than  formerly.  Secondly, 
owing  to  the  recent  discovery  and  employment  of  new  and 
more  economical  processes,  more  quinine  can  now  be  made 
at  less  cost  in  from  three  to  five  days  than  could  have  been 
effected  by  old  methods  in  twenty  days. 

PAPER  AND  BAGS. — A  quarter  of  a  century  ago,  or  less, 
paper  was  made  almost  exclusively  from  the  fibers  of  cotton 
and  linen  rags ;  and  with  an  enormous  and  continually  in- 
creasing demand,  paper  and  rags  not  only  rapidly  increased 
in  price,  but  continually  tended  to  increase,  and  thus  greatly 
stimulated  effort  for  the  discovery  and  utilization  of  new 
fibrous  materials  for  the  manufacture  of  paper.  These  efforts 
have  been  so  eminently  successful  that  immense  quantities  of 
pulp  suitable  for  the  manufacture  of  paper  are  now  made 
from  the  fibers  of  wood,  straw,  and  various  grasses,  and  so 
.cheaply  that  the  prices  of  fair  qualities  of  book-paper  have 
declined  since  the  year  1872  to  the  extent  of  fully  fifty  per 
cent,  while  in  the  case  of  ordinary  "  news  "  the  decline  has 
been  even  greater.  Hags,  although  still  extensively  used, 
have,  by  the  competitive  supply  of  substitute  materials,  and 
a  consequent  comparative  lack  of  demand,  been  also  greatly 
cheapened,  and  the  cotton  rags  sold  in  1887  for  a  lower 
price  in  the  London  market  than  ever  before  recorded. 

The  returns  of  the  American  Paper-Makers'  Association 
exhibit  the  following  changes  that  have  taken  place  in  this 
department  of  industry  in  the  United  States,  comparing 
the  years  1880  and  1888 :  Increase  of  capital  employed,  from 
146,000,000  to  $80,000,000;  of  product,  from  451,000,000 
tons  to  1,200,000,000  ;  of  wages,  from  an  average  of  $1.13  to 
$1.50  per  day.  On  the  other  hand,  the  average  value  of  a 
pound  of  paper  declined  from  6-09c.  in  1880  to  3*95c.  in 


156  RECENT  ECONOMIC  CHANGES. 

1888 ;  and  the  per  cent  of  labor  per  pound,  from  94  cents 
to  77  in  the  same  period.  In  other  words,  while  the  cost 
(wages)  of  labor  has  increased  thirty- two  per  cent,  the  cost  of 
labor  per  pound  of  paper  has  decreased  twenty-two  per  cent. 
NITRATE  OF  SODA. — The  recent  price  experiences  of 
nitrate  of  soda  (Chilian  saltpeter)  have  been  very  curious. 
The  supply  of  this  article,  which  corresponds  to  the  more 
valuable  nitrate  of  potash  (true  saltpeter),  is  practically  lim- 
ited to  one  locality  on  the  earth's  surface — a  rainless,  desert 
track — in  the  province  of  Tarapaca,  which  formerly  belonged 
to  Peru,  but  has  recently  been  annexed  to  Chili.  It  is 
cheaply  and  plentifully  obtained,  at  points  from  fifty  to 
ninety  miles  from  the  coast,  by  dissolving  out  the  nitrate 
salt  from  the  desert  earth,  which  it  impregnates,  with  water, 
and  concentrating  the  solution  by  boiling  to  the  point  where 
the  nitrate  separates  by  crystallization.  Up  to  the  year  1845 
it  was  an  article  so  little  known  to  commerce  that  only  6,000 
tons  were  annually  exported ;  but  as  its  value  as  a  fertilizing 
agent  in  agriculture,  and  as  a  cheap  source  of  nitrogen  in 
the  manufacture  of  nitric  acid,  became  recognized,  the  de- 
mand for  it  rapidly  increased  until  the  amount  exported  in 
1883  was  estimated  at  570,000  tons,  or  more  than  a  thousand 
million  pounds.  To  meet  this  demand  and  obtain  the  profit 
resulting  from  substituting  skillful  for  primitive  methods  of 
extracting  and  marketing  the  nitrate,  foreign  capital,  mainly 
English,  extensively  engaged  in  the  business.  A  large 
amount  of  English-made  machinery,  and  many  English  en- 
gineers and  mechanics,  were  sent  out  and  planted  in  the 
desert ;  additional  supplies  of  water  were  secured,  and  a 
railroad  fifty-nine  miles  in  length  constructed  to  the  port  of 
Iquique  on  the  sea-coast,  for  the  transportation  of  coal,  pro- 
visions, and  other  material  up,  and  the  nitrate  as  a  return 
freight  down.  So  energetically,  moreover,  was  the  work 
pressed,  that  at  the  last  and  most  complete  establishment 
constructed  under  English  auspices,  the  business,  employing 
when  in  full  operation  six  hundred  men,  was  prosecuted 


NITRATE  OF  SODA.  157 

unremittingly  by  night  (by  the  agency  of  the  electric  light) 
as  well  as  by  day.  The  result  was  exactly  what  might  have 
been  anticipated.  The  export  of  nitrate,  which  was  319,000 
tons  in  1881,  rose  to  570,000  tons  in  1883 ;  and  prices  at 
the  close  of  1883  declined  with  great  rapidity  to  the  extent 
of  more  than  fifty  per  cent,  or  to  a  point  claimed  to  be 
below  the  cost  of  production.  Such  a  result,  threatening 
the  whole  business  with  disaster,  led  to  an  agreement  on  the 
part  of  all  the  interests  concerned,  to  limit  from  June,  1884, 
to  January,  1887,  the  product  of  every  establishment  to 
twenty-five  per  cent  of  its  capacity.  But,  notwithstanding 
these  well-devised  measures,  prices  were  not  immediately 
restored  to  their  former  figures,  the  average  price  per  cwt. 
in  London  having  been  10s.  in  1886,  as  compared  with  an 
average  of  14s.  for  1867-'77.  Since  1887  the  increase  in  the 
demand  for  this  commodity,  especially  by  the  growers  of 
beet-root  on  the  Continent,  has  been  very  marked ;  and  the 
world's  consumption  is  estimated  to  have  advanced  from 
502,000  tons  in  1887  to  645,000  in  1888.  The  world's  total 
supply  increased,  however,  'during  the  same  period  in  a 
greater  proportion,  namely,  from  507,000  tons  in  1887  to 
715,000  tons  in  1888.  The  almost  certainty  that  the  con- 
sumption of  nitrate  of  soda  is  to  continue  increasing,  and 
the  knowledge  that  its  supply  is  or  can  be  thoroughly  con- 
trolled, gave  rise  in  1888  to  great  speculation  in  the  shares 
of  the  various  producing  companies,  and  advanced  their 
prices  to  very  high  figures.  This  experience  of  nitrate  of 
soda  seems  especially  worthy  of  notice,  because  it  constitutes 
another  example  of  a  great  and  rapid  decline  in  the  price 
of  a  standard  and  valuable  commodity  in  the  world's  com- 
merce, and  for  which — all  the  facts  being  clearly  understood 
— it  is  not  possible  to  assign  any  other  cause  than  that  of 
production  in  excess  of  any  current  demand  for  consump- 
tion, and  which  in  turn  has  been  solely  contingent  on  the 
employment,  under  novel  conditions,  of  improved  methods 
for  overcoming  territorial  and  climatic  difficulties. 
8 


158  RECENT  ECONOMIC   CHANGES. 

Concurrently  with  the  fall  in  the  price  of  nitrate  of 
soda,  saltpeter,  or  nitrate  of  potash,  also  notably  declined 
from  28s.  3d.  in  1880  to  21s.  in  1887  (for  English  refined), 
a  fact  which  seems  to  find  a  sufficient  explanation  in  the 
circumstance  that  nitrate  of  soda  can  be  used  to  a  certain 
extent  as  a  substitute  for  nitrate  of  potash,  and  that  the  ex- 
port of  the  latter  from  India,  the  country  of  chief  supply, 
increased  from  352,995  cwt.  in  1881  to  451,917  cwt.  in  1885, 
or  thirty-six  per  cent. 

The  decline  in  the  prices  of  many  chemicals,  due  to  im- 
provements •  in  methods  and  to  excess  of  production,  has 
also  been  very  great  in  recent  years — the  decline  in  soda-ash 
from  1872  having  been  fifty-four  per  cent,  while  bleaching- 
powders  (chloride  of  lime)  declined  from  £10  in  1873  to  £6 
15s.  in  1878,  reacting  to  £9  in  1887 ;  but  declined  to  £7  15s. 
in  1888.  During  1888  the  supply  of  salt — the  crude  material 
out  of  which  soda  is  manufactured — having  passed  under  the 
control  of  an  organization  or  "  trust,"  the  price  of  salt,  and 
consequently  the  price  of  soda-ash,  materially  advanced.  Caus- 
tic soda  in  1887  touched,  however,  the  lowest  price  on  record. 

MEATS. — The  price  of  meats,  according  to  the  statistics 
of  English  markets,  exhibits  no  material  decline,  comparing 
the  average  prices  of  1867-'77  and  of  1878-'85.  But  during 
the  years  1885  and  1886  the  decline  was  very  considerable, 
and  extended  also  to  most  other  animal  products.  The  per- 
centage of  fall  in  the  carcass  prices  of  different  kinds  and 
quantities  of  meat  in  London,  as  given  by  the  London 
"Economist"  of  November  27,  1885,  was,  in  comparison 
with  the  prices  for  1879,  as  follows :  For  inferior  beef,  forty- 
three  per  cent ;  prime  beef,  eighteen  per  cent ;  prime  mut- 
ton, thirteen  per  cent;  large  pork,  twenty-two  per  cent; 
middling  mutton,  twenty-seven  per  cent. 

In  November,  1887,  Mr.  W.  E.  Bear,  of  England,  pub- 
lished the  following  estimates  of  the  meat-supply — home 
and  foreign — of  the  population  of  the  United  Kingdom  for 
the  years  1877  and  1885,  respectively : 


PRODUCTION  AND  PRICES  OF  MEATS.  159 

Year.  Population.          Total  meat-supply. 

1877 33,446,000  30,800,000  cwt. 

1885 36,331,000  36,460,000    " 

Increase  of  population,  8*6  per  cent. 
"          supply,        18         " 

The  decline  in  the  average  export  price  of  salt  beef  in 
the  United  States  was  from  8*2  cents  per  pound  in  1884  to 
6  cents  in  1886  (twenty-six  per  cent) ;  of  salt  pork  from  8*2 
cents  to  5*9  cents  (twenty-seven  per  cent) ;  of  bacon  and 
hams  from  9-6  cents  to  7'5  cents ;  and  of  lard  from  9-4  cents 
to  6- 9  cents.  In  the  case  of  lard-oil  an  exceptionally  great 
decline  in  price  in  recent  years— i.  e.,  from  an  average  of  94 
cents  per  gallon  (Cincinnati  market)  in  1881-'82  to  a  mini- 
mum of  48*8  cents  in  1886,  is  claimed  to  be  due  mainly  to 
the  large  production  and  more  general  use  of  vegetable  oils 
— cotton-seed  oil  in  the  United  States,  and  palm  and  cocoa- 
nut  oils  in  Europe.  The  effect  of  the  increased  quantity 
and  cheapness  of  these  vegetable  oils  has  been  especially 
marked  in  England,  France,  Italy,  and  Germany ;  and  has 
also  undoubtedly  influenced  the  price  of  tallow,  the  decline 
of  which  in  English  markets,  comparing  the  average  prices 
of  1867-'77  with  those  of  1886,  having  been  thirty-one  per 
cent,  while  in  the  United  States  the  price  for  1884-'85  was 
the  lowest  on  record. 

The  •  immediate  cause  of  this  decline  in  the  price  of 
meats  in  the  United  Kingdom  and  on  the  Continent  of 
Europe  was  undoubtedly  the  new  sources  of  supply  of  live 
animals  and  fresh  meats  that  have  been  opened  up  to  Europe, 
and  especially  to  Great  Britain,  from  extra-European  coun- 
tries :  the  value  of  the  imports  into  Great  Britain  from  North 
America  of  live  animals  having  increased  from  $1,085,000 
in  1876  to  $22,980,000  in  1885 ;  of  fresh  meat  from  $1,950,- 
000  to  $11,820,000 ;  and  of  fresh  meat  from  Australia  and 
the  river  Plate  (transported  through  refrigeration)  from 
$880,000  in  1882  to  $5,850,000  in  1885 ;  a  total  increase  of 
from  $3,025,000  in  1870  to  $40,650,000  in  1885.  The  abil- 


160  RECENT  ECONOMIC  CHANGES. 

ity  of  the  three  countries  named  to  increase  their  exports  of 
meat  during  such  a  brief  period  to  such  an  enormous  extent, 
constitutes  of  itself  a  demonstration  of  increased  product 
and  of  the  diminished  price  that  is  the  invariable  accom- 
paniment of  a  surplus  seeking  a  market.*  All  these  coun- 
tries, moreover,  coincidently  with  their  increased  exports  of 
meats,  increased  their  stocks  of  cattle,  sheep,  and  pigs. 
Thus,  in  the  United  States  the  increase  in  the  number  of 
cattle  between  1870  and  1880  was  sixty-six  per  cent ;  f  in 
Australia,  between  1873  and  1883,  forty-three  per  cent; 
while  the  recent  increase  in  the  Argentine  States  is  believed 
to  have  been  in  a  greater  ratio.  In  respect  to  sheep,  also, 
their  number  increased  in  the  United  States  from  33,783,- 
000  in  1875  to  50,626,000  in  1884 ;  in  Australia,  from  57,- 
144,000  in  1873  to  83,369,000  in  1883,  and  97,900,000  in 
1887 ;  while  in  the  Argentine  States  the  number  at  present 
is  estimated  to  be  nearly  as  great  as  in  all  Australia. 

It  is  probable  that  the  number  of  cattle  in  Europe  has 
not  increased  in  recent  years,  and  may  have  declined,  al- 
though there  are  no  recent  accepted  statistics  on  this  point. 
"  The  Continent  of  Europe,  however,  as  a  whole,"  according 
to  the  London  "Economist"  (October  15,  1887),  "supplies 
itself  with  beef  and  spares  a  surplus  for  the  United  King- 
dom. It  is  true  that  a  few  countries  (of  the  Continent)  im- 

*  A  statement  of  the  late  Neumann-Spallart — a  recognized  authority — 
that  "  the  total  international  trade  in  meat  of  all  kinds  had  only  increased 
from  1,946,000,000  marks  in  1877  to  1,954,000,000  in  1884,"  has  been  regarded 
by  some  writers  as  constituting  proof  that  the  decline  in  the  price  of  meats 
during  these  years  could  not  have  been  occasioned  by  any  increased  supply. 
If,  however,  the  greatly  inereaaed  quantity  of  meat  which  a  given  amount  of 
money  (gold)  represented  in  1 884  over  1877  is  taken  into  consideration,  the 
deductions  from  Mr.  Spallart's  figures  are  capable  of  a  very  different  interpre- 
tation. 

t  In  the  United  States  there  has  been  since  1883  a  marked  decline  in  the 
value  of  prairie  cattle  on  the  hoof,  which  in  the  main  has  resulted  from  over- 
supply.  In  1888  the  receipts  at  the  Union  Stock  Yards,  at  Chicago,  were 
230,000  head  in  excess  of  what  had  ever  been  received  before.  Besides,  there 
was  a  large  visible  unmarketed  supply. 


FROZEN-MEAT  TRADE.  161 

port  small  quantities  of  beef  in  one  form  or  other,  but  there 
is  a  net  surplus."  Commenting  on  this  subject,  an  elabo- 
rate report  on  "  Cattle  and  Dairy  Farming,"  issued  by  the 
United  States  State  Department  in  1887,  also  thus  sums  up 
the  situation :  "  It  would  seem  as  if  the  cattle,  meat,  and 
dairy  producers  of  the  world  (that  portion  at  least  which 
prosecutes  advanced  agriculture)  look  to  the  British  markets 
for  the  consumption  of  their  surplus  products."  And,  in 
confirmation  of  this  conclusion,  the  same  report  makes  the 
following  exhibit  of  the  manner  in  which  the  exports  of 
"cattle  and  their  products"  from  the  United  States  in  1885 
were  distributed  according  to  value  :  "  To  the  United  King-, 
dom,  $54,250,000 ;  to  all  the  other  countries  in  Europe, 
$3,200,000 ;  to  all  the  countries  outside  of  Europe,  $4,108,- 
176."  And  what  is  true  of  the  distribution  of  the  exports 
of  the  surplus  meat  products  of  the  United  States  in  recent 
years  has  been  equally  true  of  those  of  Australia,  Canada, 
and  the  "  river  Plate."  Or,  in  other  words,  the  admitted 
.great  increase  in  the  export  of  cattle  and  cattle  products,  as 
well  as  of  other  meats  from  all  these  countries  in  recent 
years,  has  practically  sought  but  one  market,  namely,  that 
of  Great  Britain. 

As  bearing  on  the  future  meat-supply  of  Europe,  it  is 
important  here  also  to  call  attention  to  the  rise  and  devel- 
opment of  a  comparatively  new  industry,  namely,  "  the 
frozen-meat  trade."  In  1860,  400  carcasses  of  frozen  mut- 
ton were  imported  from  Australia  into  Great  Britain;  in 
1888  the  importations  from  Australia  and  the  river  Plate 
were  close  on  to  2,000,000  carcasses.  One  establishment  in 
New  Zealand — "  The  Canterbury  Freezing  Company  " — has, 
it  is  stated,  contracted  with  ship-owners  for  the  transporta- 
tion of  frozen  mutton  to  London  for  the  years  1889  and 
1890  at  a  rate  not  exceeding  one  penny  per  pound.  This 
reduction  in  the  charge  for  freight  has  been  rendered  possi- 
ble by  a  change  in  the  conditions  of  trade.  At  one  time 
only  from  10,000  to  12,000  carcasses  could  be  carried  in 


162  RECENT  ECONOMIC  CHANGES. 

each  ship ;  now  the  average  would  be  between  24,000  and 
30,000  carcasses  to  each  vessel.  The  London  charges  are 
reckoned  at  \d.  per  Ib. ;  in  New  Zealand  they  are  slightly 
under  %d. ;  the  total,  therefore,  will  not  exceed  2d.  per  Ib. 
This,  on  the  minimum  price  of  3$d.  in  London,  will  give 
the  farmer  l^d.  per  Ib.,  in  addition  to  skin  and  fat.  The 
Argentine  States  of  South  America  are  also  largely  engaged 
in  the  exportation  of  frozen  meats,  and,  under  the  stimulus 
of  a  bounty  offered  by  the  Government,  the  business  promises 
to  assume  large  proportions. 

CHEESE. — American  cheese  experienced  an  extraordi- 
nary decline  in  price  from  twelve  to  thirteen  cents  in  1880 
to  8f  and  10£  cents  in  1885 ;  and,  as  the  American  contri- 
bution of  this  article  of  food  to  the  world's  consumption 
has  constituted  in  recent  years  a  large  factor,  the  world's 
prices  generally  corresponded  with  those  of  the  American 
market.  This  decline  in  the  United  States  was  due  mainly 
to  two  causes:  First.  The  establishment  of  the  cheese- 
factory,  which  brought  new  processes  and  new  machinery — 
not  adapted  for  economical  use  by  small  or  individual  farmer 
producers — to  the  business  of  manufacturing,  and  so  revo- 
lutionized and  greatly  cheapened  production.  Second.  The 
relative  prices  of  butter  and  cheese  in  the  United  States 
after  1880-'81  were  so  much  to  the  advantage  of  the  latter, 
that  large  quantities  of  milk  which  had  previously  gone  to  the 
creameries  to  be  made  into  butter,  found  their  way  into 
factories  to  be  made  into  cheese ;  and  for  the  years  1883, 
1884,  and  1885,  the  annual  receipts  at  New  York  city 
averaged  twenty-five  per  cent  in  excess  of  the  receipts  for 
1880.  Demand  for  export  at  the  same  time  largely  fell 
off,  and  so  assisted  in  the  decline  of  prices;  the  same 
influences  existing  in  the  United  States  having  also  appar- 
ently prevailed  to  a  degree  in  other  cheese-producing  coun- 
tries ;  the  amount  recognized  by  the  trade  as  having  been 
supplied  to  the  great  cheese-consuming  countries,  Great 
Britain,  the  Continent  of  Europe,  and  South  America,  hav- 


CHEESE  AND  PISH.  163 

ing  increased  from  1880  to  1884  to  the  extent  of  fourteen 
per  cent. 

Among  new  sources  of  cheese-supply  in  recent  years  is 
New  Zealand,  whose  product  in  large  and  rapidly  increas- 
ing quantities  is  becoming  a  factor  in  the  European  market. 
The  unprofitableness  of  wheat-culture  in  many  countries  is 
also  undoubtedly  turning  the  attention  of  their  farming 
classes  to  dairy  farming  in  preference,  and  for  this  reason 
the  world's  supply  of  cheese  has,  and  is  likely  to  be,  largely 
augmented.  One  proof  of  this  is  to  be  found  in  the  circum- 
stance that  the  Swiss  agriculturists — the  reputation  of  whose 
cheese  product  is  proverbial — are  complaining  of  an  inability 
to  extend  and  even  hold  their  existing  markets,  and  are 
devoting  more  attention  to  the  raising  of  cattle  with  a  view 
to  their  exportation. 

PISH. — The  years  1884  and  1885  in  the  United  States 
were  notable  for  a  plethora  of  all  kinds  of  dry  and  pickled 
fish  on  the  one  hand,  and  of  extreme  low  prices  of  such 
commodities  on  the  other ;  mackerel  having  touched  a  lower 
price  in  the  Boston  market  than  for  any  year  since  1849, 
while  for  codfish  the  price  was  less  than  at  any  time  since 
the  year  1838.  Subsequently  to  1885  the  price  experiences 
of  mackerel  have  been  most  interesting.  For  some  reason 
the  American  fishermen  have  not  been  able  to  catch  as 
many  mackerel  as  formerly ;  the  catch  of  the  New  England 
fleet  declining  from  478,000  barrels  in  1884  to  50,000  bar- 
rels in  1888.  Demand  in  the  latter  year,  accordingly,  soon 
absorbed  the  supply ;  prices  advanced  several  hundred  per 
cent,  and  at  the  close  of  the  year  1888  there  was  not  only  no 
trade  in  salted  mackerel,  but  there  was  none  possible. 

FREIGHTS. — Although  a  service  and  not  a  commodity, 
the  reduction  in  recent  years  of  freights,  or  the  cost  of 
transportation  and  distribution,  may  be  legitimately  in- 
cluded in  the  first  group  of  price  experiences,  and  here  con- 
sidered, as  no  other  one  agency  has  been  more  influential 
in  occasioning  a  decline  in  prices.  It  has,  moreover,  acted 


KECENT  ECONOMIC  CHANGES. 

universally,  is  without  dispute  entirely  the  outcome  of  new 
processes,  constructions,  and  machinery,  and  has  no  con- 
nection whatever  with  matters  pertaining  to  currency,  or 
standards  of  value.  Its  influence  has  also  necessarily  mani- 
fested itself  very  unequally,  occasioning  the  greatest  price- 
reductions  in  the  case  of  articles — like  cereals,  meats,  fibers, 
ores,  and  all  coarser  materials — in  respect  to  which  trans- 
portation constitutes  the  largest  element  of  cost  at  the  place 
of  consumption;  and  least  in  the  case  of  articles — like 
textiles,  spirits,  spices,  teas,  books,  and  similar  products — 
where  great  values  are  comprised  in  small  bulk.  The  in- 
vestigations of  Mr.  Atkinson  show,  that  had  the  actual 
quantity  of  merchandise  moved  by  the  railroads  of  the 
United  States  in  1880  been  subjected  to  the  average  rate 
per  ton  per  mile  which  was  charged  from  1866  to  1869,  the 
difference  would  have  amounted  to  at  least  $500,000,000 
(£100,000,000),  and  perhaps  $800,000,000  (£160,000,000), 
more  than  the  actual  charge  of  1880.  Comparing  1865 
with  1885,  Mr.  Atkinson  further  shows  that,  taking  a  given 
weight  of  goods  to  be  moved  from  Chicago  to  New  York, 
one  thousand  miles,  by  the  New  York  Central  Kailroad, 
fifty-eight  per  cent  of  the  original  value  was  absorbed  in 
transportation  and  depreciation  of  the  currency  in  the 
former  year;  while  in  1885  only  twenty  per  cent  was  so 
absorbed — the  charge  per  ton  per  mile  having  fallen  from 
3-45  cents  in  1865  to  1-573  cents  in  1873,  and  to  0-68  of  a 
cent  in  1885. 

In  1883  the  average  rate  on  all  classes  of  freight,  on  all 
classes  of  railways  in  the  United  States,  was  1'236  cents  per 
ton  per  mile.  In  1887  it  was  only  a  trifle  over  a  cent ;  a 
reduction  in  the  short  space  of  three  years  that  is  little  less 
than  marvelous. 

The  fall  in  price  for  the  carriage  of  commodities  by  sea 
has  also  been  as  remarkable  as  the  decline  in  the  cost  of 
carriage  by  land.  Freight,  on  the  average,  between  Calcutta 
and  England  experienced  a  decline  of  about  fifty  per  cent 


PRICE  CHANGES  IN  FREIGHTS.  165 

in  1885  as  compared  with  1875.  In  the  case  of  India 
wheat  transported  to  England  via  the  Suez  Canal,  the  de- 
cline in  freights  was  from  71s.  3d.  per  ton  in  October,  1881, 
to  27s.  in  October,  1885,  or  more  than  sixty-three  per  cent. 
Between  1873  and  1885  the  tolls  and  pilotage  on  the  Suez 
Canal  were  reduced  to  the  extent  of  about  thirty-three  per 
cent. 

Freights  from  New  York  to  Liverpool  declined,  from 
1880  to  1886,  as  follows  (maximum  and  minimum) :  On 
grain,  from  9%d.  to  Id.  per  bushel ;  on  flour,  from  25s.  to 
7s.  6d.  per  ton ;  on  cheese,  from  50s.  to  15s.  per  ton ;  on 
cotton,  from  f d.  to  -fad.  per  pound ;  and  on  bacon  and  lard, 
from  45s.  to  7s.  Qd.  per  ton.  Ocean  freights  continued  very 
low  until  the  latter  months  of  1888.  In  May  of  that  year, 
wheat  to  Antwerp  from  New  York  was  taken  at  half  a  cent 
per  bushel  of  sixty  pounds ;  a  rate  which  could  not  have 
paid  for  the  cost  of  loading  and  discharging  the  cargo.  As 
to  the  cause  of  the  decline  in  ocean  freights  there  can  be 
no  controversy.  Between  1881  and  1883  shipping  returned 
fair  dividends  on  the  investment.  The  ocean  shipping  of 
the  world,  taken  as  a  whole,  was  operated  during  1884, 
1885,  1886,  1887,  and  a  great  part  of  the  year  1888  without 
profit.  The  immediate  cause  of  the  change  in  the  situa- 
tion was  an  over-production  of  tonnage.  The  profits  made 
by  cargo-vessels  prior  to  1883 — in  some  instances  very  great 
— stimulated  ship-building,  and  multitudes  of  men  having 
no  practical  experience  became  ship-owners.  Capitalists 
large  and  small  readily  furnished  the  money  where  invest- 
ment seemed  so  promising.  Fewer  sailing-ships  and  more 
steamers  were  built,  largely  increasing  the  capacity  for 
work.  In  1875  the  business  done  per  ton  .by  British  ship- 
ping, in  active  employment,  was  10^  tons  ;  in  1886,  it  was 
13^5-  tons.  The  transition  from  wood  to  iron,  and  from 
iron  to  steel,  in  the  construction  of  vessels ;  the  improve- 
ments in  machinery  which  largely  economize  fuel  and  labor ; 
and  the  bounty  system,  by  which  some  of  the  Continental 


166  RECENT  ECONOMIC  CHANGES. 

states  of  Europe  offer  a  premium  on  ship-building — have 
also  been  important  factors.  Low  freights  have  caused  a 
diminished  demand  for  ship-building  materials,  and  this 
in  turn  has  depressed  the  prices  of  materials  for  construct- 
ing ships,  and  cheapened  them. 

Mr.  Kobert  Giffen,  in  a  report  to  the  Koyal  Commission 
on  Trade  Depression,  has  run  an  interesting  line  of  com- 
parison between  the  imports  and  exports  per  head,  and  the 
entries  of  shipping  per  head,  in  the  United  Kingdom  since 
1855-'59.  From  1855  to  1874  the  values  of  British  imports 
and  exports  increased  more  than  the  increase  of  shipping ; 
but  after  1874  values  increased  very  slowly,  and  between 
1875-'79  declined,  while  the  increase  in  shipping  went  on  at 
very  rapid  rates. 

TELEGRAPH  RATES. — The  great  decline  in  telegraph 
rates  in  recent  years,  in  common  with  all  other  agencies 
that  have  reduced  the  expenses  of  business,  has  also  been  an 
instrumentality  of  no  little  potency  in  influencing  a  decline 
of  general  prices.  Taking  the  experience  of  the  United 
States  as  a  criterion,  the  charges  for  the  transmission  of 
dispatches  were  on  the  average  six  times  less  in  1887  than 
in  1866.  For  example,  the  reductions  between  1866  and 
1887  in  the  cost  of  sending  ten  words  from  New  York  to 
the  following  various  points,  was  as  follows :  To  St.  Louis, 
from  $2.25  to  40c. ;  to  Galveston,  Texas,  from  $5.50  to  75c. ; 
to  San  Francisco,  from  $7.45  to  $1.00;  to  Washington, 
from  75c.  to  25c. 

Attention  is  next  asked  to  the  second  group  of  staple 
commodities  which  have  experienced  a  notable  decline  in 
price  in  recent  years ;  and  in  respect  to  the  causes  of  which 
the  evidence,  although  more  inferential  and  circumstantial, 
through  lack  of  universally  accepted  data,  than  in  the  case 
of  the  commodities  included  in  the  first  group,  seems,  nev- 
ertheless, to  be  sufficiently  positive  and  conclusive. 

WHEAT., — The  most  important  commodity  in  this  group 


RECENT  PRICE  EXPERIENCES  OF  WHEAT.       167 

is  wheat ;  the  price  experiences  of  which,  in  recent  years, 
have  been  as  follows :  Comparing  the  years  1875  and  1882, 
there  was  no  very  marked  change  in  the  price  of  wheat  in 
the  English  market ;  the  average  for  the  year  1875  having 
been  45s.  %d.  per  quarter,  and  for  the  year  1881,  45s.  4d. 
In  the  United  States  the  average  export  price  was  $1.12  per 
bushel  in  1875  and  $1.11  in  1881.  After  1882  prices  de- 
clined rapidly ;  the  average  price  of  British  wheat,  which 
was  45s.  4cd.  per  quarter  in  that  year,  falling  to  32s.  I0d.  in 
1885,  to  31s.  3d.  in  1886,  and  to  less  than  30s.  in  1887, 
which  last  quotation  was  the  lowest  since  average  market 
prices  have  been  officially  recorded.* 

The  average  price  of  wheat  in  the  English  markets  for 
the  decade  from  1870  to  1880  was  forty-three  per  cent 
higher  than  the  average  of  1886 ;  and  the  average  prices 
from  1859  to  1872  were  sixty-eight  per  cent  higher  than  the 
average  of  1886. 

An  analysis  of  the  comparative  prices  of  wheat  in  the 
United  States  furnishes  corresponding  results :  the  average 
price  of  No.  2  spring  wheat  having  declined  in  the  Chicago 
market  from  $1.10  (gold)  in  1872  to  seventy-six  and  a  half 
cents  in  1886;  and  sixty-seven  cents  in  July,  1887;  a  price 
equivalent  to  29s.  per  quarter  in  the  harbor  at  Liverpool,  or 
eighty-six  cents  per  bushel,  cost,  freight  and  insurance  in- 
cluded. This  is  about  the  lowest  price  ever  reported  for  the 
United  States  since  wheat  has  become  an  exportable  product. 

In  seeking  for  an  explanation  of  such  price  phenomena, 
we  find  a  factor  at  the  outset  which  has  undeniably  been  most 
influential,  namely,  the  great  reduction  in  recent  years  in  the 
cost  of  the  transportation  or  distribution  of  all  commodi- 
ties, and  more  especially  of  the  commodity  wheat.  Thus, 

*  The  Eaton  record  gave  only  26*.  9%d.  per  quarter  as  the  price  for  the  year 
1761,  when  reduced  to  Winchester  bushels  ;  but  there  is  no  certainty  that  the 
average  for  the  entire  year  was  even  in  that  one  market  as  low  as  that,  and 
still  less  that  the  price  was  as  low  in  more  than  one  hundred  and  fifty  Eng- 
lish market  towns  as  it  was  in  1886. 


168  RECENT  ECONOMIC  CHANGES. 

the  freight  on  wheat  from  New  York  to  Liverpool  declined 
from  9±d.  per  bushel  in  1880  to  Id.  per  bushel  in  1886. 
According  to  Mr.  Edward  Atkinson,  who  has  made  this 
matter  a  special  study,  the  reduction  in  the  cost  of  the  in- 
land transportation  of  American  wheat  a  distance  of  fifteen 
hundred  miles,  comparing  the  rates  charged  in  1870-'72 
with  those  of  1887,  was  equivalent  to  a  fraction  over  Us. 
per  quarter  reduction  in  the  delivery  cost  of  such  wheat  in 
the  English  market,  and  for  the  reduction  in  the  cost  of 
ocean  transportation  between  the  two  periods,  he  estimates 
4:8.  per  quarter.  In  addition,  the  substitution  of  sacks  cost- 
ing 13  cents  for  barrels  costing  50  cents  (in  1872)  is  be- 
lieved to  be  equivalent  to  a  further  reduction,  if  rated  on 
wheat,  of  Is.  per  quarter ;  and,  finally,  for  reduction  of 
charges  in  hauling,  elevating,  and  milling  (assuming  the 
wheat  to  be  exported  in  the  form  of  flour)  at  least  3s.  per 
quarter  more  must  be  allowed ;  so  that,  if  these  estimates  of 
reduction  are  correct  (and  they  have  not  been  controvert- 
ed), the  American  farmer  could  have  sold  wheat  in  Eng- 
land in  1887  for  34s.  pe»  quarter,  with  as  much  of  profit  to 
himself  as  54s.  per  quarter  would  have  afforeded  him  in  the 
years  from  1870  to  1873  inclusive. 

In  June,  1881,  and  June,  1886,  the  prices  of  Cawnpore 
wheat  at  Calcutta  were  at  the  same  level,  namely,  2-9  rupees 
per  maund.  The  cost  of  Indian  wheat  in  London  in  1881 
was  42s.  a  quarter,  and  31s.  6d.  in  1886,  or  10s.  Gd.  differ- 
ence. In  1881  the  rate  of  freight  on  wheat  from  India 
to  London  was  60s.  per  ton,  and  in  1886  30s.,  a  difference 
of  30s.  per  ton,  or  6s.  6d.  per  quarter.  The  decline  in 
freights,  therefore,  accounts  for  6s.  6d.  out  of  the  10s. 
6d.  per  quarter  difference  between  the  prices  of  Indian 
wheat  in  London  in  1881  and  1886  respectively,  leaving 
4s.  per  quarter  to  be  contributed  by  other  agencies.  Be- 
tween 1879  and  1886  the  charge  for  the  railway  transport  of 
grain  between  Cawnpore  and  Calcutta  (684  miles)  was  re- 
duced to  the  extent  of  about  2s.  per  quarter,  which  repre- 


INCREASED  SUPPLY  OF  WHEAT.       169 

sented  to  the  purchaser  in  Calcutta  an  equivalent  reduction 
in  the  cost  of  Indian  production,  and  in  the  absence  of 
which  the  Calcutta  and  European  prices  would  obviously 
have  been  correspondingly  increased.  A  further  reduction 
of  6d.  per  quarter  "  is  probably  owing  to  a  decline,  during 
the  same  period,  in  the  price  of  the  gunny-bags  "  in  which 
the  wheat  is  transported ;  leaving  3s.  6d.  per  quarter,  which 
may  not  unreasonably  be  referred  to  and  fully  accounted 
for  by  the  extraordinary  decline  of  more  than  12s.  per 
quarter,  between  the  years  1880  and  1885,  in  the  export 
price  of  American  wheat;  which,  as  hitherto,  the  largest 
factor  in  determining  the  world's  surplus  of  this  com- 
modity, has  also  been  necessarily  the  largest  factor  in  deter- 
mining what  shall  be  the  price  of  this  surplus  in  the  world's 
market.* 

Here,  then,  is  an  agency  which  sufficiently  accounts  for 
a  great  part  of  the  recent  decline  in  the  price  of  wheat,  and 
which  would  have  operated  all  the  same,  even  if  the  relative 
values  of  the  precious  metals  existing  in  1870-'73  had  re- 
mained unaltered. 

The  next  point  worthy  to  be  taken  into  consideration 
in  this  inquiry  is,  that  the  increase  in  the  supply  of  wheat 
in  recent  years,  in  many  parts  of  the  world,  has  been  very 
great.  The  report  of  the  British  Gold  and  Silver  Com- 
mission (1888)  characterizes  it  "as  enormous,"  and  asserts 
that  it  "  has  been  due,  in  a  great  measure,  to  the  fact  that 
vast  territories  consisting,  in  some  instances,  of  virgin  soil, 
have  been  opened  up  by  the  construction  of  railways,  and 
have  become  the  means  of  creating  supplies  largely  in  ex- 
cess of  the  needs  of  those  engaged  in  their  production."  f 
Thus,  in  the  United  States,  for  example,  the  increase  was 
from  250,000,000  bushels  in  1872,  to  512,000,000  in  1884, 

*  See  "  First  Report  of  the  British  Commission " — evidence  of  Henry 
Waterfleld,  C.  B.,  Financial  Secretary  of  the  India  Office,  and  representing 
the  Government  of  India,  pp.  125,  126. 

t  "  Final  Report  of  the  British  Gold  and  Silver  Commission,"  p.  66. 


170  RECENT  ECONOMIC  CHANGES. 

declining  in  the  succeeding  year  (1885)  to  357,000,000,  and 

recovering  to  477,000,000  in  1886. 

• 

"  It  is  a  significant  fact,  in  connection  with  the  rapid  increase  of 
population  in  the  United  States,  and  with  the  decline  in  proportion  of 
rural  population,  that  its  wheat-supply  of  forty  years  ago  should  not 
only  have  been  sustained  but  increased.  In  1849  the  product  was  4'33 
bushels  for  each  inhabitant :  in  1859,  5-5 ;  in  1869,  7'46 ;  in  1879,  9.16 ; 
and  in  1884,  9-16  per  capita.  From  1849  to  1884,  a  period  of  thirty- 
five  years,  the  increase  of  population  was  141  per  cent,  while  the  in- 
crease in  the  production  of  wheat  was  410  per  cent." — Report  of  the 
United  Stales  Department  of  Agriculture,  1887. 

The  published  results  of  the  investigations  of  Mr.  Ed- 
ward Atkinson,  based  on  the  reports  of  the  United  States 
Agricultural  Department,  also  show  that  the  cereal  crops  of 
the  United  States,  measured  in  bushels,  increased  from 
1873  to  1885  at  the  rate  of  nearly  one  hundred  per  cent, 
while  the  increase  of  the  population  of  the  country  dur- 
ing the  same  period  was  not  in  excess  of  thirty-seven  per 
cent. 

In  1881  the  Territory  of  Dakota  (U.  S.),  comprising  over 
150,000  square  miles,  had  not  produced  a  single  bushel  of 
wheat  for  sale.  In  1886  its  crop  was  estimated  by  the  U.  S. 
Department  of  Agriculture  at  30,704,000  bushels,  or  nearly 
as  great  as  the  average  annual  export  of  wheat  from  India 
since  1880,  and  which  export,  according  to  a  recognized  Eng- 
lish authority  (Mr.  William  E.  Bear),  has  been  primarily  re- 
sponsible for  the  decline  in  recent  years  in  the  world's  aver- 
age price  of  wheat.  In  1887  the  crop  was  62,553,000  bush- 
els, or  one  seventh  of  the  total  wheat  product  of  the  United 
States  in  1886.  In  1888  the  wheat-crop  of  this  same  Terri- 
tory, owing  to  a  remarkably  unpropitious  season,  declined 
to  37,948,000  bushels,  and  was  considered  a  failure ;  but  if 
it  was  a -failure,  it  was,  nevertheless,  37,000,000  bushels  in 
comparison  with  a  product  of  not  even  one  marketable 
bushel  seven  years  before,  and  could  not  afford  the  slight- 
est reason  for  inferring  that  the  future  wheat  product  of 


EXPORT  OP  INDIA  WHEAT.  171 

Dakota  is  not  to  go  on  increasing  from  year  to  year  in  a 
continually  augmenting  ratio. 

During  the  same  period,  Australia  and  New  Zealand,  in 
which  a  rapid  growth  of  population  inevitably  tends  to  di- 
vert agricultural  industry  from  wool-producing  to  wheat- 
growing,  largely  increased  their  production  of  wheat. 

Previous  to  1873  there  was  practically  no  trade  or  move- 
ment in  wheat  between  Europe  and  India.  The  high  cost 
of  transportation  and  the  existence  of  an  Indian  export- 
duty  of  above  six  per  cent  made  it  impossible  that  there 
should  be  any.  But  with  a  reduction  of  freights  by  sea,  fol- 
lowing the  opening  of  the  Suez  Canal,  and  by  land,  in  con- 
sequence of  the  construction  of  railways  in  India,  coupled 
with  a  removal  of  an  export  duty,  the  export  of  Indian 
wheat  commenced  and  rose  to  18,896,000  bushels  in  1880, 
19,466,000  in  1885,  36,880,000  in  1886,  and  41,588,000 
in  1887. 

"  There  is  nothing  more  remarkable  in  the  history  of  railway  enter- 
prise than  the  development  of  the  traffic  that  has  occurred  on  Indian 
railways  within  the  last  ten  years,  to  go  no  further  back.  In  1876  the 
total  quantity  of  goods-traffic  carried  on  all  the  railways  of  India  was 
5,750,000  tons.  In  1885  the  quantity  was  about  19,000,000  tons.  In 
the  year  1876  the  mileage  open  was  6,833  miles,  so  that  the  volume  of 
goods-traffic  carried  per  mile  was  about  800  tons.  In  1885  the  mileage 
open  was  12,376,  so  that  the  average  volume  of  traffic  carried  per  mile 
was  over  1,500  tons.  (In  1888  the  mileage  open  was  14,383.)  The 
aggregate  volume  of  traffic  in  the  interval  had  fully  trebled,  and  the 
average  traffic  carried  per  mile  open  had  almost  doubled.  Notwith- 
standing these  remarkable  results,  the  traffic  which  has  been  developed 
on  the  railways  of  India  is  less,  in  proportion  to  the  population,  than 
that  of  any  other  country  in  the  world.  This  is  especially  the  case  in 
reference  to  goods-traffic,  which  only  represents  some  -05  of  a  ton  per 
head  of  the  population,  as  compared  with  three  tons  per  head  in 
Canada,  and  over  seven  tons  per  capita  in  the  United  Kingdom.  But 
the  goods-traffic  of  India  is  likely  to  develop  very  rapidly  in  the  future, 
and  especially  in  agricultural  produce,  of  which  only  about  4,000,000 
tons  are  now  annually  transported,  as  compared  with  75,000,000  tons 
in  the  United  States  for  less  than  a  fourth  of  the  population. — Brad- 
&treeCs  (N.  Y.)  Journal. 


RECENT  ECONOMIC  CHANGES. 

In  1878  the  Argentine  States  of  South  America  were  not 
reckoned  as  a  factor  to  the  smallest  extent  in  the  world's 
wheat-supply;  but  in  1885  they  exported  4,000,000  bush- 
els of  this  cereal,  and  in  1887  over  8,000,000.  In  the  case 
of  Eussia  her  aggregate  exports  of  wheat,  comparing  the 
four  years  from  1873  to  1876  with  the  four  years  from  1881 
to  1884,  increased  over  thirty-eight  per  cent ;  while  for  the 
years  of  1887-'88  her  exports  amounted  to  112,000,000 
bushels.  In  Austria-Hungary  the  average  annual  wheat 
product  for  the  seven  years  from  1873  to  1880,  was  93,000,000 
bushels ;  but  for  the  seven  years  from  1880  to  1886,  inclu- 
sive, it  was  133,000,000  bushels. 

Finally,  it  is  to  be  noted  that,  in  very  few  branches  of 
production,  have  greater  improvements  been  made  and 
adopted  in  recent  years  than  in  the  growing  of  wheat ;  the 
maximum  result  of  which  finds  expression  in  the  statement, 
which  is  well  supported  by  evidence,  that  in  California  * 
wheat  can  now  be  grown  at  a  cost  of  not  over  seventy  cents 
per  one  hundred  pounds,  or  forty-two  cents  per  bushel. 

Now  while  the  evidence  of  the  recent  great  increase  in 
the  world's  production  of  wheat  is  not  and  can  not  be 
questioned,  it  is  nevertheless  claimed  that  such  increase  has 
not  been  in  excess  of  the  increased  demand  for  this  cereal 
for  consumption,  in  consequence  mainly  of  the  increase  in 
the  world's  wheat-consuming  population ;  and  that  here, 
also,  some  other  cause  than  oversupply  must  be  sought  for 
to  explain  the  phenomenal  decline  in  the  price  of  this  com- 
modity. Such  a  claim  has  found,  however,  but  very  few 
advocates,  and  its  discussion  involves  the  employment  and 
comparison  of  statistical  data  that  are  in  themselves  matters 

*  On  many  of  the  large  ranches  of  California  steam-plows  are  used,  and 
on  others  gang-plows  -which  turn  four  to  six  furrows  and  are  drawn  by  from 
eight  to  fourteen  mules.  Not  unfrequently  the  plows  are  run  in  a  straight 
line  for  a  distance  of  six  or  eight  miles.  A  patent  machine  for  sowing  seed  is 
employed,  by  means  of  which,  it  is  claimed,  one  man  and  a  team  can  sow  one 
hundred  acres  of  grain  in  a  day. 


PRODUCTION  AND  PRICES  OF  WHEAT.  173 

of  controversy.  On  the  other  hand,  the  opinion  of  nearly 
all  investigators  in  all  countries,  who  are  regarded  as 
authorities  on  this  subject,  is  in  the  highest  degree  in 
favor  of  the  theory  of  increased  supply.  Eeference  has 
already  been  made  to  the  opinions  of  the  British  Gold 
and  Silver  Commission  (1888)  which  was  created  in  great 
part  for  the  purpose  of  investigating  into  the  cause  of  the 
decline  of  prices.  The  opinion  of  the  United  States  De- 
partment of  Agriculture,  as  given  in  the  report  for  1887, 
was  as  follows : 

"  Wheat-growing  was  stimulated  greatly  between  1875  and  1880 
by  a  series  of  crop  failures  in  Western  Europe,  causing  a  demand 
which  never  existed  before,  and  may  never  again.  Meantime,  the 
world's  production  has  kept  up,  with  little  change  or  diminution,  de- 
pressing prices,  and  furnishing  cheap  bread  to  consumers,  and  little 
profit  to  producers ;  and  yet  the  inquiry  is  made,  Why  are  prices  so 
low  f  In  view  of  these  facts,  the  question  needs  no  answer.  It  is 
utterly  useless  to  pretend  reduction  of  area,  as  some  do,  where  there 
is  none.  The  influence  of  over-production  on  prices  in  the  United 
States  is  seen  in  a  comparison  of  the  farm  prices  of  wheat  per  bushel 
for  the  two  periods  from  1870  to  1880,  and  from  1880  to  1887,  viz., 
$1.049  and  $0.833  respectively ;  showing  a  reduction  of  20-6  per  cent. 

In  a  communication  to  the  "Journal  of  the  Royal 
Agricultural  Society"  of  England,  of  May  1,  1888,  Mr 
William  E.  Bear,  a  recognized  authority  on  agricultural 
matters,  says : 

"The  exports  of  wheat  from  India  were  not  considerable  until 
1881-'82,  and  whether  it  is  merely  a  coincidence,  or  more  than  that,  it 
is  ft  fact  that  the  average  price  of  wheat  in  England  has  been  per- 
manently below  45s.  a  quarter  only  since  1882."  And  again,  speaking 
of  the  relative  quantities  of  wheat  imported  into  the  United  Kingdom 
from  1881  to  1887,  he  says:  "  These  figures  show  that  the  receipts  of 
wheat  from  India,  which  in  only  one  previous  year  had  been  as  much  as 
five  percent  of  the  total  foreign  supplies,  rose  to  10-3  per  cent  in  1881,  to 
fifteen  per  cent  in  1885,  and  to  16'7  per  cent  in  1886.  Surely  such 
proportions  were  large  enough  to  account  for  a  great  fall  of  prices, 
considering  that  they  represent  receipts  from  a  new  source  of  supply. 
And  as  we  had  not  felt  the  want  of  these  new  supplies,  there  was  no 


RECENT  ECONOMIC  CHANGES. 

natural  demand  for  them  except  at  the  expense  of  other  importing 
countries ;  and  as  the  other  countries  had  prepared  to  meet  our  wants 
to  the  full,  the  large  surplus  from  India  produced  the  effect  always  to 
be  expected  from  a  glut  in  the  markets." 

"  But  the  effect  of  Indian  wheat  upon  prices  is  more  clearly  to  be 
estimated  by  the  supply  to  Europe,  which  during  the  six  years  ending 
with  1886- '87  averaged  over  4,000,000  quarters  per  annum — a  very 
large  quantity  to  come  on  top  of  supplies  already  ample,  and  just  after 
wheat  production  in  the  United  States  had  reached  its  maximum.  Of 
course,  the  entire  fall  in  the  price  of  wheat  is  not  attributed  to  the 
Indian  supply,  as  the  decline  in  the  prices  of  commodities  has  been 
general.  But  it  is  contended  that  the  Indian  supply  is  the  principal 
cause  of  the  excessive  drop  in  the  value  of  wheat."  * 

Again,  during  all  the  years  in  which  wheat  has  been  de- 
clining or  ruling  at  low  prices,  there  has  never  been  any 
apprehension  for  any  length  of  time,  on  the  part  of  grain 
merchants  and  dealers,  of  any  scarcity  of  its  supply  in  the 

*  The  following  represents  the  opinions  of  other  recognized  authori- 
ties: 

The  German  economist,  Kleser,  writing  on  this  subject,  says :  "  The  in- 
quiry whether  the  cheapness  of  gram  is  the  result  of  the  specific  appreciation 
of  gold,  seems  to  be  superfluous  in  presence  of  the  fact,  for  instance,  that  the 
export  of  wheat  from  India  grew  from  an  unrecorded  minimum  in  1870  to  11,- 
000,000  cwts.  in  1883,  a  similar  expansion  of  the  trade  in  cereals  having  occurred 
in  Kussia  and  the  United  States."  See  "  Eecent  Currency  Discussions  in  Ger- 
many," "  British  Foreign  Office  Beports,"  No.  40,  p.  13.  The  distinguished 
French  economist,  M.  Leroy-Beaulieu,  as  the  result  of  his  investigations,  has 
also  indorsed,  in  the  "  Revue  des  Deux  Mondes,"  the  opinion  that  the  cause 
of  the  decline  in  the  prices  of  grain  has  been  unmistakably  due  to  an  increase 
and  cheapening  of  product,  and  believes  that,  even  in  Europe,  the  supply  of 
food  in  recent  years  has  increased  faster  than  population. 

"  The  decline  in  the  price  of  English  wheat  La  twelve  years  has  been  26s. 
Id.  per  quarter,  and  in  the  last  five  years  8s.  8d.  per  quarter,  of  eight  bushels. 
The  principal  causes  of  this  large  depreciation  in  prices  are  the  heavy  increase 
in  production  of  wheat  in  British  India,  Australasia,  and  in  the  United  States." 
— BradstreeP  s  Journal,  N.  Y.,  January^  1888. 

"  Prices  of  breadstuffs  have  not  been  fully  maintained  during  the  past 
week,  for  reasons  previously  explained.  Somewhat  more  favorable  reports 
regarding  the  growing  crops  are  mentioned  as  a  reason,  but  the  bottom  fact  in 
the  business  is  that  the  supply  of  wheat  continues  to  exceed  by  many  million 
bushels  the  quantity  likely  to  be  required." — New  Tori;  Commercial  Bulletin^ 
May  21, 1888. 


LESSON  OF  THE  WHEAT  CROP  OF  1888.         175 

principal  markets  of  the  world.  During  all  these  years, 
the  complaint,  moreover,  of  the  absence  of  all  profit  in  pro- 
ducing wheat  has  been  almost  universal.  Under  such  cir- 
cumstances of  pressing  necessity,  it  is  almost  needless  to 
say  that  producers,  aided  by  speculators,  would  have  speed- 
ily advanced  the  prices  of  this  cereal  if  it  had  been  in  their 
power;  and  it  is  equally  clear  that  the  only  reason  why 
they  have  failed  to  do  so  is  because  the  trade  everywhere 
has  recognized  that  the  supply  of  wheat  was  sufficient  to 
meet  all  demands  at  the  current  low  prices;  and  that 
under  such  a  condition  of  affairs  no  material  advance  in 
price  was  possible.  In  short,  during  all  the  years  in  which 
the  decline  in  wheat  has  been  phenomenal,  the  law  of 
supply  and  demand  has  not  been  violated,  and  price  in  the 
world's  market  has  conformed  strictly  to  the  supply  of  the 
world. 

The  experience  of  the  years  1888  and  1889  would  also 
seem  to  constitute  evidence,  almost  in  the  nature  of  a  dem- 
onstration, of  the  entire  accuracy  of  the  opinion  which 
ascribes  the  recent  low  prices  of  wheat  mainly  to  a  supply 
largely  in  excess  of  the  world's  requirements  at  prices  cur- 
rent under  old  conditions  of  the  production  and  distribu- 
tion of  this  commodity.  Thus,  it  is  agreed  that  "the 
world's  product  of  wheat  for  1888  was  far  below  the  aver- 
age ;  the  crops  of  the  United  States,  Australia,  Canada,  and 
the  Argentine  Republic  being  regarded  as  failures ;  *  and 
in  September,  1888,  recognized  English  authorities  pre- 
dicted a  deficiency  in  the  world's  supplies  for  the  year,  even 
after  allowing  for  reserved  stocks,  of  50,000,000  bushels. 
But  this,  and  all  other  like  predictions,  failed  to  material- 

*"The  continued  depression  in  the  wheat  trade  under  circumstances 
which  might  have  been  expected  to  bring  an  improvement  in  prices  is  dis- 
heartening and  calculated  to  cause  growers  to  despair  of  remunerative  returns 
for  years  to  come,  as  the  chances  are  that  it  will  be  a  long  time  before  the 
world's  supply  will  again  be  as  small  as  it  is  for  the  current  cereal  year." — 
WILLIAM  E.  BEAR,  BradstreePs  Journal,  April,  1889. 


176  RECENT  ECONOMIC  CHANGES. 

ize ;  for  the  world's  supply  of  wheat  proved  so  entirely 
adequate  for  meeting  all  demands  that  its  price  move- 
ments for  the  cereal  year  1888-'89  in  the  London  market 
(the  representative  center  of  demand)  were  most  incon- 
siderable ;  and  the  year  closed  with  a  conceded  large  unsold 
surplus. 

The  future  supply  and  price  of  wheat  are  matters  of 
speculation  not  pertinent  to  the  present  inquiry ;  but  one 
point  belonging  to  the  domain  of  fact  has  certainly  an  im- 
portant bearing  on  these  problems,  and  that  is,  that  the  ex- 
traordinary construction  of  railroads,  especially  in  the  United 
States,  the  Argentine  Eepublic,  India,  and  Australia,  is 
making  available  enormous  tracts  of  land  eminently  fitted 
for  wheat-culture,  which  hitherto,  by  reason  of  inaccessibil- 
ity, have  practically  been  non-existent ;  while  improvements 
in  methods  of  cultivation  have  greatly  facilitated  and  cheap- 
ened production.  "  Each  mile  of  railroad  constructed  in  a 
new  country  is  a  kind  of  centrifugal  pump  furnishing  for 
exportation  hundreds  of  tons  of  the  products  of  such  coun- 
try." *  The  report  of  the  United  States  Agricultural  De- 
partment for  1889  shows  an  increase  in  the  extent  of  culti- 
vated land  in  the  United  States,  and  consequent  expansion 
of  agricultural  possibilities,  that  is  certainly  akin  to  the 
marvelous.  Between  1879  and  1888 — a  period  of  nine  years 
— the  area  occupied  by  the  four  principal  arable  crops  of 
the  country — cotton,  corn,  wheat,  and  oats — experienced  an 
enlargement  of  31,000,000  acres ;  or  from  128,000,000  to 
159,000,000  acres.  Furthermore,  great  as  is  the  present 
wheat  product  of  the  United  States,  Mr.  Atkinson  has 
shown  that  all  the  land  at  present  in  actual  use  in  that 
whole  country  for  growing  maize  or  Indian  corn,  wheat, 
hay,  oats,  and  other  food-crops,  is  less  than  300,000  square 
miles,  out  of  1,500,000  miles  of  arable  land  embraced  in  its 
present  national  domain ;  and,  also,  that  the  present  entire 

*  M.  F.  Bernard,  "  Journal  des  JSconomiBtes." 


FUTURE  SUPPLY  AND   PRICE  OF  WHEAT.        177 

wheat-crop  of  the  United  States  could  be  grown  on  wheat- 
land  of  the  best  quality  selected  from  that  part  of  the  area 
of  the  State  of  Texas  by  which  that  single  State  exceeds  the 
present  area  of  the  German  Empire.* 

In  short,  it  would  seem  as  if  the  world  in  general,  for 
the  first  time  in  its  history,  has  now  good  and  sufficient 
reasons  for  feeling  free  from  all  apprehensions  of  a  scarcity 
or  dearness  of  bread.  But,  while  from  a  strictly  humani- 
tarian point  of  view  this  is  certainly  a  matter  for  congratu- 
lation, the  results,  viewed  from  the  standpoint  of  the  interests 
involved,  which  embraces  a  large  part  of  the  world's  popu- 
lation, appear  widely  different.  The  effect  of  the  extensive 
fall  in  prices  of  agricultural  products  during  the  last  decade 
has  been  most  disastrous  to  the  agricultural  interests  and 
population  of  Europe.  It  has  reduced  farming  in  England 
and  in  most  of  the  states  of  the  Continent  to  the  lowest 
stage  of  vitality ;  and,  by  reason  of  the  complaints  of  their 
agriculturists,  the  customs  duties  of  many  countries  have 
been  largely  increased,  and  the  conditions  of  consumers 
greatly  modified.  In  France  the  position  has  been  taken, 
by  not  a  few  familiar  with  the  situation,  that  the  only  pos- 
sible means  of  salvation  for  the  agriculture  of  central  Eu- 
rope will  be  for  France,  Germany,  Austria,  and  Italy  to  sink 
all  political  antipathies  and  jealousies  and  form  an  inter- 
national customs  union  to  exclude  all  food-products  from 
Kussia,  Australia,  and  America. 

The  present  agricultural  condition  of  Italy  is  thus  de- 
picted in  a  report  recently  made  (1888)  to  the  Agricultural 
Department  of  the  British  Privy  Council,  by  Mr.  W.  N. 


*  Although  the  prices  of  grain  have  seriously  fallen  in  Russia — about  twenty 
per  cent  in  1888  below  those  of  1881— yet,  according  to  a  recent  report  to  the 
British  Foreign  Office  from  the  British  consul  at  Tanganrog,  "  The  present 
prices  of  wheat  (1888)  not  only  cover  the  cost  of  production,  but  on  most 
estates  in  wheat-regions  yield  a  moderate  profit,  owing,  no  doubt,  to  the  fact 
that  the  cost  of  production  is  lower  in  Kussia  than  in  any  other  wheat-growing 
country,  except  India." 


178  RECENT  ECONOMIC  CHANGES. 

Beauclerk,  a  secretary  in  the  British  diplomatic  service. 
He  says : 

"  Agriculture  in  Italy  is  in  the  throes  of  a  severe  crisis.  American 
competition  is  strongly  felt  in  the  corn-trade,  and  there  are  those  who 
even  go  so  far  as  to  predict  that  the  agricultural  population  must  ret- 
rograde to  the  pastoral  state,  unless  things  change  for  the  better — a 
spectacle  which  might  astonish  the  universe.  And  with  regard  to  the 
great  question  of  progress  in  agricultural  production  so  as  to  make  a 
stand  against  the  importation  from  America,  and  to  secure  the  future 
existence  of  the  rural  population,  the  verdict  of  the  landholders  of 
Italy  is  thus  given :  as  long  as  millions  of  acres  remain  unreclaimed  and 
untilled,  as  long  as  the  majority  and  the  strongest  of  men  are  under 
arms,  as  long  as  huge  armies  entail  excessive  expenditure,  and  agri- 
culture is  suffocated  with  a  weight  of  taxation  which  absorbs  from  one 
third  to  one  half  of  the  returns,  and  so  long  as  education,  credit,  and 
manures  are  wanting,  we  can  not  strive  with  a  reasonable  prospect  of 
success." 

In  1880  forty-four  per  cent  of  the  entire  population  of 
the  United  States  was  engaged  in  agriculture,  and  less  than 
seven  per  cent  in  manufactures ;  and  since  the  year  1820, 
or  for  a  period  of  sixty-six  years,  the  proportion  between 
the  agricultural  and  non-agricultural  exports  of  this  country 
has  been  remarkably  steady,  the  average  for  the  former  for 
the  whole  of  this  period  having  been  about  seventy-eight 
per  cent.  Up  to  the  present  time  there  has  been  little  tend- 
ency to  change  in  these  proportions  ;  but,  if  the  continued 
fall  of  prices  of  agricultural  products  in  the  United  States 
and  other  countries  should  compel  their  farming  populations 
to  seek  other  employments,  what  other  employments  are 
open  to  them  ?  That  the  world  will  ultimately  adjust  itself 
to  all  new  conditions  may  not  be  doubted ;  but  what  of  the 
period  pending  adjustment  ? 

As  bearing  upon  this  subject,  certain  statements  recently 
(1889)  published  by  the  United  States  Agricultural  Depart- 
ment are  of  the  highest  interest  and  importance.  From 
these  it  appears  that  Europe  is  practically  the  only  market 
that  America  can  have  for  her  surplus  wheat.  But  the 


RECENT  PRICE  EXPERIENCES  OF  COTTON.       179 

wheat-crop  of  Europe,  which  has  not  materially  declined 
within  the  last  ten  years,  and  which  "  represents  more  than 
half  of  all  that  is  grown  in  the  world,"  is  so  nearly  sufficient 
to  meet  the  wants  of  its  people,  that  "  if  the  surplus  of  east- 
ern Europe  should  be  distributed  only  in  the  Continental 
states,  it  would  nearly  supply  all  their  deficiencies,  leaving 
practically  only  Great  Britain  to  receive  the  imports  of  other 
continents,  and  consume  alone  the  surplus  of  the  wheat 
markets  of  the  world." 

The  present  average  wheat-crop  of  Europe  is  estimated 
at  1,200,000,000  bushels,  and  her  average  annual  deficiency 
of  supply,  to  be  made  good  by  foreign  imports,  at  144,000,- 
000  bushels.  Of  this  deficiency  the  United  States,  in  ordi- 
nary years,  can  supply  about  100,000,000  bushels;  but  in 
1880  the  United  States,  Russia,  India,  Australia,  and  the 
Argentine  Eepublic  exported  a  surplus  of  208,987,000  bush- 
els, of  which  the  United  States  contributed  sixty-nine  per 
cent.  It  is  obvious,  therefore,  that  with  this  limitation  of 
market,  any  enlargement  of  the  surplus  wheat-product  of 
the  United  States  must  inevitably  reduce  its  price  at  home 
and  abroad. 

For  the  other  cereal  products  of  the  United  States  the 
European  demand  is  comparatively  inconsiderable.  The 
imports  of  European  countries  requiring  maize,  for  exam- 
ple, do  not  make  a  sum  half  as  large  as  the  products  of  sin- 
gle States.  The  deficiency  of  France  could  be  supplied  by 
single  counties,  and  Germany  requires  still  less. 

COTTON  declined  in  price,  taking  the  annual  reported  * 
averages  of  upland  middlings  in  Liverpool,  from  Qd.  per  Ib. 
in  1873  to  6^-  in  1880 ;  5fd.  in  1883,  and  5|rf.  in  188G ; 
the  last  being  the  lowest  price  on  record  since  1848,  when 
the  average  was  4£f/. 

The  world's  supply  of  cotton  since  1873  has  been  as  fol- 
lows :  1872-'73,  6,3(J6,000  bales ;  1882-'83, 10,408,000  bales : 

*  See  Annual  Tables  of  Liverpool  Cotton  Association. 


180  RECENT  ECONOMIC  CHANGES. 

an  increase  in  ten  years  of  63*5  per  cent.  After  1882  there 
was  a  notable  decline  in  the  estimated  crop  of  the  world, 
but  for  1885-'86  the  aggregate  crop  is  believed  to  have  been 
9,580,000  bales ;  or  an  increase  in  supply  in  thirteen  years 
of  about  fifty  per  cent.  For  1886-'87  the  estimate  was 
9,757,000  bales,  and  for  1887-'88  10,161,000.*  Such  an  in- 
crease in  supply,  it  seems  hardly  necessary  to  say,  was  very 
far  in  excess  of  any  increase  in  the  total  population  of  the 
world  during  the  period  of  years  under  consideration,  and 
also  in  excess  of  any  increase  in  the  population  of  those 
countries  of  the  world  that  are  the  principal  consumers  of 
cotton  fabrics.  But  here,  again,  as  in  the  case  of  wheat, 
it  is  contended  that  the  consumption  of  cotton  has  in- 
creased in  at  least  an  equal  degree,  and  tables  have  been 
published  showing  that  the  consumption  in  a  series  of 
recent  years  has  even  exceeded  production.  Hence  the 
decline  in  the  price  of  cotton,  it  is  argued,  must  have 
been  due  to  causes  other  than  those  contingent  on  supply 
and  demand. 

That  consumption  of  cotton  fabrics  has  greatly  increased 
can  not  be  questioned.  It  has  followed  naturally  from  the 
very  great  increase  in  the  productive  power  of  labor,  using 
improved  machinery,  and  a  consequent  great  decline  in  the 
prices  of  such  fabrications ;  the  equivalent  of  the  labor  of 
an  operative  in  the  factories  of  New  England  having  in- 
creased, for  example,  from  12,164  yards  in  1850  to  19,293 
in  1870,  and  28,032  in  1884,  while  the  reduction  in  the  price 
of  standard  sheetings  from  1850  to  1885  was  about  ten  per 
cent,  and  of  standard  prints  and  printing- cloths,  during  the 
same  period,  approximately  forty  per  cent. 

A  curious  discrepancy  in  the  rates  of  decline  in  the  price 
of  raw  materials  and  of  the  products  manufactured  from 
them  (to  which  attention  has  been  called  in  the  case  of  pe- 
troleum) occurs  in  the  price  experiences  of  cotton  and  cot- 

*  New  York  "  Financial  Chronicle,"  September  10, 1887. 


PRODUCTION  AND  CONSUMPTION  OF  COTTON.    181 

ton  fabrications.  Thus,  comparing  1855  and  1886,  the  aver- 
age price  of  the  cotton  imported  into  Great  Britain  was 
only  five  per  cent  lower  in  the  latter  year  than  in  the 
former ;  but  the  decline  in  the  average  price  of  the  British 
exports  of  cotton  cloth  during  the  same  period  was  twenty- 
one  per  cent.*  The  agencies  that  have  operated  to  occasion 
decline  in  the  two  instances  would,  therefore,  seem  to  have 
been  altogether  different. 

A  comparison  of  the  most  reliable  statistics  of  the 
world's  cotton  production  and  consumption  for  recent  years 
furnishes,  however,  some  information  on  this  subject  of  a 
definite  character.  Thus,  comparing  1872-'73  with  1882- 
'83,  production  increased  from  6,366,000  bales  to  10,408,- 
000,  or  in  the  ratio  of  63*5  per  cent ;  the  world's  consump- 
tion during  the  same  period  increasing  from  6,425,000  bales 
to  9,499,000,  or  in  the  ratio  of  47'8  per  cent.  Comparing 
the  years  1872-'73  with  1885-'86,  the  increase  in  production 
was  from  6,366,000  bales  to  9,580,000,  or  in  the  ratio  of 
about  fifty  per  cent ;  and  of  consumption  from  6,425,000 
bales  to  9,371,000,  or  in  the  ratio  of  45-8  per  cent.f 

At  the  same  time  every  year  closes  with  a  visible  uncon- 
sumed  surplus  stock  of  cotton,  which  varies  from  about  one 
sixth  of  the  estimated  year's  consumption  (as  in  1883-'84) 
to  about  one  tenth  (as  in  1887-'88).  But,  as  the  average 
stocks  carried  over  from  year  to  year  are  not  as  large  as 
formerly,  it  is  claimed  that  herein  is  to  be  found  proof  that 
reduction  in  the  price  of  cotton  could  not  have  occurred 
through  an  excess  of  supply.  A  consideration,  however,  of 
the  great  changes  which  have  taken  place  in  recent  years  in 
the  conditions  of  supply  and  demand  in  respect  to  cotton, 
in  common  with  most  other  stable  commodities,  deprives 
the  claim  of  much  if  not  of  all  significance.  Fifteen  or 
twenty  years  ago  the  means  of  determining  the  present  and 

*  Address  of  Mr.  Bcrtwhistlc,  Secretary  of  Lancaster  (England)  Weavers' 
Association,  1886. 

t  "Financial  Chronicle,"  New  York,  September  15, 1888. 
9 


182  RECENT  ECONOMIC  CHANGES. 

prospective  supply  of  the  world's  great  products  were  very 
imperfect,  and  considerable  time  was  required  before  reli- 
able information  could  be  collected  and  disseminated ;  and, 
in  the  case  of  cotton  especially  it  was  a  matter  of  doubt 
whether  the  United  States  would  speedily  or  ever  regain 
and  hold  its  former  relative  importance  as  a  producer  of 
this  commodity.  Under  such  circumstances  it  was  un- 
doubtedly most  important,  for  the  stability  of  production 
and  trade,  that  great  reserves  of  raw  materials  should  be 
constantly  kept  in  store,  or  in  sight.  But  with  the  marvel- 
ous changes  in  the  facilities  for  collecting  and  disseminat- 
ing information  which  have  come  in  recent  years,  with  the 
opening  of  many  new  sources  of  supply,  with  the  ability  to 
know  from  day  to  day  the  amount  of  stock  on  hand  of  any 
article  in  any  quarter  of  the  globe,  and  its  prospective  con- 
ditions of  supply,  the  same  importance  no  longer  attaches 
to  reserve  stocks ;  and,  in  fact,  they  are  no  longer  kept  at 
great  central  points  of  distribution  to  anything  like  the 
same  extent  as  formerly.  In  the  case  of  cotton  the  manu- 
facturers of  the  world  have  seen  the  crop  of  the  United 
States  increasing  at  the  rate  of  seventy-six  per  cent  between 
the  years  1866  and  1872,  forty-nine  per  cent  between  1872- 
'73  and  1885-'86,  and  they  have  also  learned  that  not  three 
per  cent  of  the  land  of  the  United  States  available  for  the 
production  of  cotton  has  as  yet  been  put  under  cultivation. 
Improvements  in  machinery,  by  which  finer  yarns  and  fabrics 
can  be  furnished  at  no  greater,  or  even  at  smaller  cost,  than 
coarser  and  less  desirable  yarns  and  fabrics  were  formerly 
supplied ;  or,  in  other  words,  the  new  ability  to  supply  to  a 
considerable  extent  the  popular  demand  for  cotton  fabrica- 
tions with  a  smaller  relative  consumption  of  cotton,  would 
also  seem  to  be  equivalent  to  increasing  the  supply  of  cot- 
ton, or  of  reducing  the  necessity  of  the  continued  mainte- 
nance of  the  reserve  stock  at  figures  that  formerly  might 
have  been  regarded  as  indispensable. 

But,  as  bearing  on  prices,  the  decline  in  the  average  of 


INFLUENCE  OF  RESERVE  STOCKS.  183 

reserve  stocks  of  cotton  carried  over  from  year  to  year,  be 
the  amount  of  such  decline  greater  or  less,  has  no  manner 
of  significance,  unless  such  decline  has  been  regarded  by 
consumers  as  indicative  of  prospective  scarcity  or  insuffi- 
cient supply  to  meet  the  demands  of  immediate  or  future 
consumption.  There  is  not,  however,  a  particle  of  evidence 
that  any  such  apprehension  has,  in  recent  years,  existed.  In 
point  of  fact,  the  evidence  all  runs  to  the  effect  that  the 
apprehension,  in  recent  years,  in  the  minds  of  the  world's 
great  consumers  of  cotton  and  all  the  other  staple  com- 
modities— sugar,  iron,  coal,  petroleum,  copper,  lead,  etc. — has 
been  of  disturbance  in  their  respective  industries,  from  an 
over-production  and  increase,  rather  than  from  any  decrease 
in  the  supplies  of  their  crude  materials  ;  and  such  a  frame 
of  mind  favors,  if  it  does  not  directly  occasion,  low  prices.* 

*  The  following  expression  of  opinion  relative  to  the  supply  of  cotton,  by 
the  "  Manchester  Examiner,"  England  (no  mean  authority),  may  also  be  read 
with  interest  in  connection  with  this  discussion.  Writing  under  date  of 
January  18,  1888,  it  says :  "  The  invisible  supply  of  actual  cotton  in  spinners' 
hands  all  over  the  world  is  now  the  largest  on  record  for  this  time  of  the  year 
— English  spinners  alone  holding  the  unprecedented  quantity  of  350,000  bales, 
which  has  been  brought  about,  to  a  very  large  extent,  by  the  fear  that  the 
small  crop  estimates  put  forth  in  November  would  prove  correct.  Besides  the 
invisible  supply  of  actual  cotton,  spinners  hold  enormous  lines  of  weekly  de- 
liveries and  futures,  which  means  that  they  can  at  any  time  keep  out  of  our 
market  for  three  months,  and  buy  only  retail  lots.  The  question  is,  will  they 
do  so  when  they  see  plainly  for  themselves  that  this  crop  is  about  seven  mill- 
ions, and  which  means  abundance  ;  and  not  6,300,000,  which  meant  scarcity  3 
.  .  .  The  fact  of  the  spinner  apparently  using  less  American  also  tends  to 
show  that  the  spinning  qualities  of  the  present  American  crops,  which  range 
now  far  higher  in  grade  and  quality  than  in  years  past,  must  be  much  better 
than  the  previous  crops — an  important  fact  when  crops  are  grown  from  six  and 
a  half  to  seven  millions.  This  has  been  entirely  lost  sight  of  when  estimating 
the  prospects  of  supply  and  demand  for  the  last  three  months  of  the  season, 
and  thereby  prophesying  scarcity,  which  so  far  has  never  yet  come  off,  and 
which  was  exemplified  again  last  July,  August,  and  September,  by  prices 
felling  Id.  per  pound  in  the  face  of  prognosticated  scarcity,  besides  leaving  a 
surplus  of  250,000  bales  nt  the  end  of  the  season,  with  the  price  at  5}<f." 

Commenting  on  the  decline  in  the  American  export  price  of  cotton  from  an 
average  of  9-9  cents  in  1886  to  9'5  cents  in  1887,  the  New  York  "  Commercial 
Bulletin,"  October,  1888,  says  :  "  This  comparison  leads  to  the  reflection  that 


184:  RECENT  ECONOMIC  CHANGES. 

It  is  interesting  to  recall  in  this  connection  that  it  was  the 
general  opinion  in  1859  that  the  American  cotton-crop  of 
the  previous  year,  1858  (3,994,000  bales),  represented  a 
maximum  capacity  of  production,  and  that  a  crop  of  over 
4,000,000  bales  could  not  be  picked,  even  if  grown.  Since 
then  the  crop  of  the  United  States  has  been  in  excess  of 
7,000,000  bales. 

The  condition  of  the  cotton-manufacturing  industry  of 
Great  Britain  (which  may  be  considered  as  typical  of  the 
condition  of  the  same  industry  in  all  other  countries)  during 
the  early  months  of  the  year  1889,  is  also  not  a  little  in- 
structive. The  production  of  cloths  was  greater  than  at 
any  former  equal  period  in  history,  and  concurrently  the 
world's  consumption  of  cotton,  judging  from  the  increase  in 
British  exports,  has  been  unprecedentedly  large.  The  situa- 
tion of  British  manufacturers,  under  such  circumstances,  to 
quote  from  the  London  "  Economist "  (May,  1889),  is,  how- 
ever, "  anything  but  encouraging  "  : 

They  "  have  been  experiencing  a  narrow  and  unprofitable  margin 
for  months,  and,  at  the  present  time,  things  are  becoming  seriously 
worse.  Speaking  broadly,  the  enormous  production  turned  off  can 
only  be  got  rid  of  at  a  comparatively  low  price,  and,  notwithstanding 
the  heavy  export,  it  appears  to  be  too  large  to  allow  prices  to  rise." 

The  legitimate  inference  from  all  this  would,  therefore, 
seem  to  be  that  the  world,  in  1889,  had  got  more  cotton 
cloth  (and  consequently  more  raw  material)  than  it  could 
consume,  at  prices  so  extremely  low  for  the  former,  as  to 
leave  little  or  no  margin  of  profit  to  manufacturers  working 
with  advantages,  as  respects  cost  and  product,  that  a  com- 
paratively few  years  ago  were  hardly  regarded  as  possibilities. 

WOOL. — According  to  the  statistics  of  M.  Sauerbeck 

perhaps  a  partial  loss  of  the  cotton-crop  this  year  may  not  prove  an  unmixed 
calamity,  since  the  enormous  increase  of  yield  for  which  the  enlarged  acreage 
had  prepared  would  probably  have  depressed  prices  most  disastrously  for  the 
producer." 


PRODUCTION  AND  PRICES  OF  WOOL.  185 

("Journal  of  the  Statistical  Society,"  March,  1887),  the 
price  of  merino  wool  (Port  Philip,  Australia,  average  fleece), 
comparing  the  average  of  the  series  of  years  1867-'77  and 
1878-'85,  declined  10-7  per  cent ;  or,  comparing  the  average 
price  of  1867-'77  with  that  of  the  single  year  1886,  when 
wool  "  was  cheaper  than  at  any  time  within  the  memory  of 
the  present  generation,"  27  per  cent.  Certain  fibers  classed 
with  wool,  and  known  as  "  alpaca  "  and  "  mohair,"  and  the 
grade  of  long-combing  English  wools  known  as  "  Lincoln/' 
experienced  a  much  greater  decline  after  1874-'75,  owing  to 
the  curious  circumstance  that  a  change  in  fashion  in  those 
years  almost  entirely  and  suddenly  destroyed  any  demand  for 
the  before  popular,  stiff,  lustrous  fabrics  manufactured  from 
such  wools  for  female  wear,  and  substituted  in  their  place  the 
soft  and  pliable  cloths  that  are  made  from  the  merino  wools. 
A  striking  illustration  of  the  decline  in  the  price  of 
wool  since  1872  is  found  in  the  experience  of  the  British 
colonial  wools,  mainly  the  product  of  Australia.  Thus,  the 
total  product  of  such  wools  during  the  year  1872  was  743,- 
000  bales,  and  the  price  realized  was  £19,690,000  ($95,821,- 
385).  In  1887  the  total  product  was  1,444,000  bales,  nearly 
double  the  quantity  of  that  of  1872,  but  the  value  showed  a 
slight  increase,  being  only  £526,000  ($2,559,779)  more  than 
that  of  1872,  on  an  aggregate  of  $98,300,000.  It  will  thus 
be  seen  that  the  increase  in  production  did  little  to  increase 
the  amount  of  money  received  by  the  growers.  For  making 
allowance  for  the  circumstance  that  the  proportion  of  colo- 
nial wool  shipped  in  the  grease  is  now  much  larger  than  it 
formerly  was,  it  is  considered  that  the  increase  in  quantity 
from  1872  to  1887  was  equal  to  about  eighty  per  cent ;  or,  in 
other  words,  the  colonies  were  obliged  to  grow  eighty  per 
cent  more  wool  in  1887  than  they  did  in  1872  in  order  to 
realize  the  same  amount  of  money.* 

*  Report  to  the  United  States  Department  of  State,  1888,  by  G.  W.  Giffin, 
United  States  consul  at  Sydney,  Australia. 


186  RECENT  ECONOMIC  CHANGES. 

The  increase  in  the  production  and  world's  supply  of 
raw  wools,  from  the  years  1860  to  1885  inclusive,  was  in  ex- 
cess of  100  per  cent.  According  to  Mr.  Sauerbeck's  tables, 
the  increase  from  1873  to  1885  inclusive,  was  20  per  cent ; 
according  to  Messrs.  Helmuth,  Schwartze  &  Co.,  of  Lon- 
don, the  increase  from  1871-'75  to  1881-'85  was  23  per 
cent,  and  from  1871-'75  to  1886,  35  per  cent.*  The  wool- 
clip  of  the  United  States  increased  from  264,000,000  pounds 
in  1880  to  329,000,000  in  1885,  or  24-6  per  cent  in  six  years. 
Taking  "  Lincoln  hogs  "  as  the  standard  of  English  wools, 
their  value  (January,  1889)  was  estimated  at  10£e?.  per 
pound.  This  price  appears  startlingly  low  compared  with 
that  which  ruled  in  1864,  namely,  2s.  6d.  per  pound ;  but 
in  that  year  the  import  of  wool  of  all  kinds  into  England 
was  only  211,000,000,  while  for  the  year  1888  it  was  not  far 
short  of  650,000,000  pounds. 

As  the  increase  in  the  production  of  wool  in  recent  years 
has  but  slightly  exceeded  the  ordinary  growth  of  population, 
and  as  the  stock  of  wool  on  hand  in  Europe  at  the  end  of 
the  year  1885  was  only  180,000  bales,  as  compared  with 
207,000  in  1880,  it  has  here  also  been  contended  that  some 
influences  other  than  those  contingent  on  supply  and  de- 
mand must  have  been  influential  in  occasioning  the  decline 
of  prices  noted.  But  every  year,  nevertheless,  has  closed 
with  a  surplus  in  excess  of  any  current  demand ;  and  it  is 
also  to  be  remembered  that  when  the  supply  of  any  com- 
modity exceeds  by  even  a  very  small  percentage  what  is 

*  The  details  of  this  increase  are  thus  stated  by  Messrs.  Helmuth,  Schwartze 
&  Co.,  of  London,  in  their  annual  review  of  the  production  and  consumption 
of  wool  for  1887  :  "  Making  allowance,"  they  say,  "  for  the  increase  of  popu- 
lation, we  find  that  the  principal  development  in  the  supply  of  wool  took 
place  from  1860  to  1868,  in  which  period  the  consumption  rose  from  2-03 
pounds  of  clean  wool  per  head  to  2'47  pounds,  or  about  22  per  cent.  From 
1868  to  1879  the  consumption  remained  practically  unchanged,  amounting  on 
the  average  to  2'41  pounds  clean  wool  per  head.  It  rose  to  2'49  pounds  for 
the  average  of  the  next  four  years,  and  was  2'58  in  1884  and  2-66  pounds  in 
1886." 


INCREASING  USE  OF  SHODDY.  187 

required  to  meet  every  demand  for  current  consumption 
— especially  in  the  case  of  a  staple  commodity  like  wool, 
whose  every  variation  in  supply  and  demand  is  studied  every 
day,  as  it  were  microscopically,  by  thousands  of  interested 
dealers  and  consumers — it  is  the  price  which  this  surplus 
will  command  that  governs  and  fixes  the  price  for  the 
whole ;  and  as  this  can  not  be  sold  readily — as  under  such 
circumstances  no  one  buys  in  excess  of  present  demand,  and 
all  desire  to  dispose  of  accumulated  stocks — the  result  is  a 
decline  of  prices,  in  accordance  with  no  law,  and  which  will 
be  more  or  less  excessive,  or  permanent,  as  opinions  vary  as 
to  the  extent  of  the  surplus  and  the  permanence  of  the 
causes  that  have  occasioned  it.* 

Another  factor,  not  to  be  overlooked,  which  in  recent 
years  has  undoubtedly  been  most  influential  in  depressing 
the  prices  of  wool,  has  been  the  increasing  use  of  "  shoddy," 
or  the  product  of  old  woolen  rags  torn  up  and  reduced  to 
fibers,  or  even  dust ;  and  also  of  immense  quantities  of  cow 
and  other  hair  for  mixing  with  wool  in  the  manufacture  of 
fabrics.  Thus,  the  import  of  woolen  rags  into  the  United 
Kingdom,  which  was  only  5,250,000  Ibs.  in  1855,  was  re- 
turned at  80,750,000  Ibs.  in  1883.  In  the  United  States, 
according  to  the  census  of  1880,  the  amount  of  scoured 
wool  that  entered  into  the  production  of  domestic  wool- 
ens during  the  previous  year  was  returned  at  109,725,- 
000  Ibs. ;  of  shoddy,  46,583,000  Ibs. ;  and  of  the  hair  of 
the  buffalo  and  other  animals,  4,495,000  Ibs. ;  or,  for  every 
2-1  Ibs.  of  wool  used,  one  pound  of  something  that  was 

*  Grcgjg'T  j^n&  m  discussing  the  law  of  prices  more  than  two  centuries  ( 
ago,  sTiowoalEaT~an  increase  or  diminution  in  the  supply  of  a  necessary  of  ) 
social  life  depresses  or  raises  the  price  to  the  consumer  in  a  degree  which  is  ( 
far  in  excess  of  the  quantity  in  excess  or  defect.    Thus,  a  deficient  supply  of  ) 
wheat,  taken  to  be  a  prime  necessary  of  life,  to  the  extent  of  flve  per  cent  in  ( 
the  customary  demand,  will  raise  the  price  ten  per  cent ;  one  of  ten  per  cent  j 
may  raise  it  thirty,  one  of  twenty  will  double  it,  and  so  on.    Excess  of  supply  \ 
will  lower  it,  but  not  in  the  same  ratio,  because  stocks  accumulate  in  hopes  of 
a  turn  in  the  market. 


188  RECENT  ECONOMIC  CHANGES. 

not  wool  entered  into  the  woolen  manufactures  of  this 
country. 

SILK. — The  decline  in  the  price  of  silk  (Tsatlee),  accord- 
ing to  M.  Sauerbeck,  from  the  average  price  of  1867-'77 
to  the  average  of  1886,  was  about  forty  per  cent ;  and  the 
average  increase  in  supply  of  all  varieties  of  silk-fiber,  com- 
paring 1873  with  1885,  was  reported  by  the  same  authority 
as  about  twelve  per  cent.  According  to  the  most  reliable 
French  statistics,  the  supply  of  raw  silk — domestic  and  for- 
eign— available  for  the  markets  of  Europe,  increased  from 
21,837,000  Ibs.  in  1884  to  25,762,000  in  1887,  or  in  the  ratio 
of  above  seventeen  per  cent.  No  relation  between  the  price 
movements  of  this  commodity  and  supply  and  demand,  or 
any  other  agencies,  can,  however,  be  established,  which  fails 
to  take  into  account  the  great  increase  in  the  use  of  the 
ramie  and  other  fibers  and  materials  within  recent  years  as 
substitutes  for  or  adulterations  of  silk  in  the  manufacture  of 
fabrics.  Thus,  recent  investigations,  made  under  the  au- 
spices of  the  United  States  revenue  authorities,  indicate,  that 
in  the  case  of  the  cheaper  silks  of  extensive  consumption, 
materials  other  than  silk  often  enter  into  their  composition 
to  the  extent  of  even  sixty  per  cent ;  and  that  other  meth- 
ods of  adulterating  silk,  formerly  but  little  known,  are  now 
extensively  practiced — all  of  which  is  equivalent  to  increas- 
ing the  supply  of  silk  for  manufacturing,  far  beyond  what 
commercial  reports  respecting  the  supply  of  the  fiber  would 
indicate. 

JUTE. — Good  medium  jute  declined  on  the  London  mar- 
ket from  £17  per  ton  in  1874  to  an  average  of  £11  10s.  in 
1886,  or  more  than  fifty  per  cent.  The  increase  in  exports 
from  British  India  was  from  5,206,570  cwt.  in  1876  to  10,- 
348,909  cwt.  in  1883,  or  ninety-eight  per  cent. 

Many  other  commodities,  of  greater  or  less  importance, 
might  be  included  in  this  investigation,  with  a  deduction  of 
like  results ;  but  a  further  exhibit  is  not  necessary,  for  it  is 
difficult  to  see  how  any  one  can  rise  from  an  examination  of 


GOLD  AND  SILVER  COMMISSION.  189 

the  record  of  the.  production  and  price  experiences  of  the 
commodities  which  have  been  specified,  which,  it  must  be 
remembered,  represent — considered  either  from  the  stand- 
point of  qualities  or  values — the  great  bulk  of  the  trade, 
commerce,  and  consumption  of  the  world,  without  being 
abundantly  and  conclusively  satisfied  that  the  decline  in 
their  prices,  which  has  occurred  during  the  last  ten  or  fif- 
teen years,  or  from  1873,  has  been  so  largely  due  to  condi- 
tions affecting  their  supply  and  demand,  that  if  any  other 
causes  have  contributed  to  such  a  result,  the  influence  ex- 
erted has  not  been  extensive ;  and,  further,  that  if  the  prices 
of  all  other  commodities,  not  included  in  the  above  record, 
had  confessedly  been  influenced  by  a  scarcity  of  gold,  the 
claims  preferred  by  the  advocates  of  the  latter  theory  could 
not  be  fairly  entitled  to  any  more  favorable  verdict  than 
that  of  "  not  proven."  The  philosophy  of  the  experiences 
which  have  been  collected  and  recorded  is,  that  the  cost  of 
producing  the  great  staple  commodities  of  the  world's  trade 
and  commerce  have,  in  comparatively  recent  years,  through 
inventions  and  discoveries,  .been  materially  reduced ;  that 
this  result  is  a  permanent  one,  and  that  every  attempt  to 
restore  the  old-time  prices — as  has  been  especially  shown 
in  the  recent  price  movements  of  copper,  tin,  and  wheat — 
results  in  disaster. 

NOTE. — In  the  year  1886  the  British  Government  created  a  "  com- 
mission "  of  persons  of  eminent  qualifications,  to  "  inquire  into  the  re- 
cent changes  in  the  relative  values  of  the  precious  metals,"  embracing 
causes  and  results.  This  commission,  after  devoting  nearly  two  years 
to  their  task,  calling  to  their  assistance  a  large  number  of  persons  as 
witnesses,  or  experts,  whom  they  regarded  as  qualified  to  express  opin- 
ions, submitted  a  "  final "  report  in  October,  1888,  embodying  the  facts 
to  which  their  attention  had  been  called;  a  summary  of  the  argu- 
ments, on  the  one  side  and  the  other,  touching  questions  in  contro- 
versy ;  and  a  marked  diversity  of  conclusions  on  the  part  of  the  several 
members  of  the  commission.  There  was,  however,  an  entire  unanimity 
of  opinion  on  some  points,  which  the  commission  express  as  follows : 

"  We  are  of  opinion  that  the  true  explanation  of  the  phenomena 


190  RECENT  ECONOMIC  CHANGES. 

which  we  are  directed  to  investigate  is  to  be  found  in  a  combination  of 
causes,  and  can  not  be  attributed  to  any  one  cause  alone.  The  action  of 
the  Latin  Union  in  1873  broke  the  link  between  silver  and  gold,  which 
had  kept  the  price  of  the  former,  as  measured  by  the  latter,  constant 
at  about  the  legal  ratio ;  and,  when  this  link  was  broken,  the  silver 
market  was  open  to  the  influence  of  all  the  factors  which  go  to  affect 
the  price  of  a  commodity.  These  factors  happen  since  1873  to  have 
operated  in  the  direction  of  a  fall  in  the  gold  price  of  that  metal." 

Six  members  of  the  commission,  embracing  one  half  of  the  whole 
number  reporting,  thus  further  summarized  their  conclusions,  in  re- 
spect to  the  remarkable  fall  in  recent  years  in  the  prices  of  commodi- 
ties: 

"  We  think  that  the  fall  in  the  price  of  commodities  may  be  in  part 
due  to  an  appreciation  of  gold,  but  to  what  extent  this  has  affected 
prices  we  think  it  impossible  to  determine  with  any  approach  to  ac- 
curacy. ' 

"  We  think,  too,  that  the  fall  in  the  gold  price  of  silver  has  had  a 
tendency  operating  in  the  same  direction  upon  prices ;  but  whether 
this  has  been  effective  to  any,  and  if  so,  to  what  extent,  we  think 
equally  incapable  of  determination. 

"  We  believe  the  fall  to  be  mainly  due,  at  all  events,  to  circumstances 
independent  of  changes  in  the  production  of,  or  demand  for,  the  pre- 
cious metals,  or  the  altered  relation  of  silver  to  gold. 

"  As  regards  the  fall  in  the  gold  price  of  silver,  we  think  that, 
though  it  may  be  due  in  part  to  the  appreciation  of  gold,  it  is  mainly 
due  to  the  depreciation  of  silver." 

In  regard  to  this  same  problem,  the  other  six  members  of  the  com- 
mission, holding  dissentient  views,  express  themselves  as  follows : 

"  We  are  not  insensible  to  the  fact  that  facilities  for  production  are 
habitually  increasing,  and  the  cost  of  production  is  constantly  becom- 
ing less.  But  these  factors  have  always  been  in  operation  since  the 
world  began ;  and,  while  we  recognize  their  tendency  to  depress  the 
prices  of  commodities,  they  are  not,  in  our  opinion,  sufficient  to  account 
for  the  abnormal  fall  in  prices,  which  has  been  apparent  since  the  rupt- 
ure of  the  bimetallic  par,  and  only  since  that  time." 


V. 

Price  experience  of  commodities  where  product  has  ijot  been  greatly  aug- 
mented— Handicraft  products — Prices  of  India  commodities — Exception- 
al causes  for  price  changes — Coral,  hops,  diamonds,  hides,  and  leather 
— Changes  in  supply  and  demand  regarded  by  some  as  not  sufficiently 
potential — Divergency  of  price  movements — Evidence  from  a  gold  stand- 
point—  Has  gold  really  become  scarce?— Gold  production  since  1850 
— Increase  in  the  gold  reserves  of  civilized  countries — Economy  in  the  use 
of  money — Clearing-house  experiences — Difference  between  gold  and 
silver  and  other  commodities  in  respect  to  use — Has  the  fall  in  prices  in- 
creased the  burden  of  debts  ? — Curious  monetary  experiences  of  the  United 
States. 

THE  question  which  next  naturally  suggests  itself  is, 
What  have  been  the  price  movements  of  such  commodities 
as  have  not  in  recent  years  experienced  in  any  marked  degree 
a  change  in  their  conditions  of  supply  and  demand  ?  Do 
they  exhibit  any  evidence  of  having  been  subjected  to  any 
influence  attributable  to  the  scarcity  of  gold  ? 

The  answer  is,  that  not  only  can  no  results  capable  of  any 
such  generalization  be  affirmed,  but  no  one  commodity  can 
even  be  named  in  respect  to  which  there  is  conclusive  evi- 
dence that  its  price  has  been  affected  in  recent  years  by  in- 
fluences directly  or  mainly  attributable  to  any  scarcity  of 
gold  for  the  purpose  of  effecting  exchanges. 

In  the  first  place,  all  that  large  class  of  products  or 
services,  which  are  exclusively  or  largely  the  result  of  handi- 
crafts ;  which  are  not  capable  of  rapid  multiplication,  or  of 
increased  economy  in  production,  and  which  can  not  be 
made  the  subject  of  international  competition — have  ex- 
hibited no  tendency  to  decline  in  price,  but  rather  the 
reverse.  A  given  amount  of  gold  does  not  now  buy  more, 


192  RECENT  ECONOMIC  CHANGES. 

but  less,  of  domestic  service  and  of  manual  and  professional 
labor  generally  than  formerly;*  does  not  buy  more  of 
amusement ;  not  more  of  hand- woven  lace,  of  cigars,  and  of 
flax,  which  are  mainly  the  products  of  hand-labor ;  of  cut- 
glass,  of  gloves,  of  pictures,  or  of  precious  stones.  It  buys 
no  more  of  horses,  and  other  domestic  animals ;  of  pepper ; 
of  cocoa,  the  cheap  production  of  which  is  limited  to  a  few 
countries,  and  requires  an  interval  of  five  years  between  the 
inception  and  maturing  of  a  crop;  of  malt  liquors,  eggs, 
currants,  and  potatoes ;  nor  also  of  house-rents,  which  de- 
pend largely  upon  the  price  of  land,  and  which  in  turn  is 
influenced  by  fashion,  population,  trade,  facilities  for  access, 
and  the  like.  Ketail  prices  generally  have  not  fallen  in 
proportion  to  the  decline  in  wholesale  prices ;  and  one  ex- 
planation that  has  been  given  for  such  a  result  is,  that  retail 
trade  is  more  directly  and  largely  dependent  on  personal 
services. 

"  Any  one  who  thinks  about  the  subject  of  gold  and  prices  must  be 
struck  with  the  curious  fact  that  it  is  in  the  wholesale  dealings  in  the 
principal  articles  of  commerce  that  the  fall  of  prices  is  shown  to  have 
taken  place,  and  that,  at  the  same  time,  in  these  dealings  little  or  no 
gold  is  ever  used ;  while,  on  the  other  hand,  in  the  dealings  (and  in 
those  countries)  in  which  gold  is  used — such  as  small  retail  dealings 
and  wages,  no  such  fall  in  prices,  or  no  equal  fall,  has  been  proved." — 
Sir  THOMAS  FARRER,  Member  of  British  Gold  and  Silver  Commission. 

*  "  There  is  no  feature  in  the  situation,  which  the  commissioners  have 
been  called  to  examine,  so  satisfactory  as  the  immense  improvement  which 
has  taken  place  in  the  condition  of  the  working- classes  during  the  last  twenty 
years." — Report  of  the  Royal  (British)  Commission  on  the  Depression  of  Trade, 
1888. 

"  There  does  not  appear  to  be  any  evidence  that  the  salaries  of  clerks  and 
others,  outside  of  what  may  be  termed  the  wage-earning  classes  proper,  have 
decreased ;  and,  although  some  house-rents  have  fallen,  it  seems  questionable 
whether,  as  except  the  more  expensive  houses,  which  are  inhabited  by  the 
wealthy,  there  has  been  any  general  diminution  of  house-rent." — Report  of  the 
British  Gold  and  Silver  Commission,  Part  77, 1888. 

"  Instead  of  an  alleged  lowering  of  the  price  of  labor,  we  have  to  report, 
taking  a  wide  extent,  rather  a  rise  in  wages." — Report  of  factory  Inspectors, 
Germany,  1886,  p.  74. 


PRICES  IN  NON-PROGRESSIVE  COUNTRIES.        193 

How  little  of  change  in  price  has  come  to  the  commodi- 
ties of  countries  of  low  or  stagnant  civilization,  that  have 
remained  outside  of  the  current  of  recent  progress,  is  strik- 
ingly illustrated  in  the  case  of  a  not  unimportant  article  of 
commerce,  namely,  the  root  sarsaparilla ;  which,  with  a 
gradually  increasing  demand,  continues  to  be  produced 
(collected  and  prepared)  in  Central  America,  by  the  most 
primitive  methods,  and  without  any  change  in  the  condi- 
tions of  supply,  save,  possibly,  some  greater  facilities  for 
transportation  from  the  localities  of  production  to  the  ports 
of  exportation.  Thus,  in  the  case  of  Honduras  sarsaparilla, 
at  New  York,  which  is  the  principal  distributing  market  of 
the  world,  the  average  price  for  the  best  grade  was  reported 
as  identical  for  the  years  1881  and  1886 ;  while  for  the 
"Mexican,"  the  average  reported  for  1881  was  eight  cents 
per  pound,  and  for  1886,  with  much  larger  sales,  from  seven 
to  eight  and  a  quarter  cents. 

The  very  slight  decline  in  recent  years  in  the  prices  of 
such  of  the  commodities  of  India  as  constitute  her  staple 
exports  is  also  an  illustration  to  the  same  effect.* 

Now,  all  of  the  commodities  referred  to,  including  labor 

*  According  to  Mr.  Robert  Giffen,  in  his  testimony  before  the  British  Gold 
and  Silver  Commission,  1886,  the  general  result  of  a  comparison  of  India  prices 
shows  a  fall  of  only  two  per  cent  in  1880-'84,  as  compared  with  1870-"T4,  or 
with  the  period  immediately  before  the  fall  in  silver : 

"  The  general  conclusion  appears  to  me  to  be  that  the  effect  of  the  present 
relations  between  gold  and  silver  have  not  told  appreciably  on  prices  in  India, 
or  on  the  relative  progress  of  her  import  and  export  trade." — Testimony  of  Sir 
LOUIB  MALLET,  late  Under- Secretary  of  State  for  India,  Member  British  Gold 
and  Silver  Commission,  1886. 

"  In  India,  in  the  opinion  of  nearly  all  the  witnesses  whom  we  have  ex- 
amined, the  purchasing  power  of  the  rupee  continues  unimpaired,  and  the 
prices  of  commodities  measured  in  silver  remain  practically  the  same.  We 
have  no  evidence  to  show  that  silver  has  undergone  any  material  change  in 
relation  to  commodities,  although  it  has  fallen  largely  in  relation  to  gold ;  in 
other  words,  the  same  number  of  rupees  will  no  longer  exchange  for  the  same 
amount  of  gold  as  formerly,  but,  so  far  as  we  can  judge,  they  will  purchase 
as  much  of  any  commodity  or  commodities  in  India  as  they  did  before." — 
Final  liepvrt  British  Gold  and  Silver  Commiesion,  p.  95. 


194  RECENT  ECONOMIC  CHANGES. 

and  personal  service,  and  many  others  which  might  be 
specified,  whose  condition  in  recent  years  has  not  been 
materially  influenced  by  changes  affecting  their  supply  and 
demand,  ought  to  have  exhibited  evidence,  in  a  decline  of 
prices,  of  the  influence  of  the  scarcity  of  gold,  if  any  such 
had  been  exerted  ;  but  they  have  not,  and  the  onus  of  show- 
ing why  they  have  not  clearly  rests  upon  those  who  deduce 
from  the  evidence  of  price  movements  the  conclusion  that 
the  standard  of  price  measurements  (gold)  has  appreciated. 

The  record  of  extreme  changes  in  prices,  by  reason  of 
circumstances  that  are  acknowledged  to  have  been  purely 
exceptional,  is  also  most  instructive,  and  removes  not  a  few 
commodities  from  the  domain  of  any  controverted  economic 
theory  respecting  monetary  influences.  Thus,  from  1862  to 
1870,  cotton,  owing  to  war  influences,  ruled  so  high — from 
seventy  to  eight  hundred  per  cent  in  excess  of  normal 
prices — that  its  inclusion  in  computations,  with  a  view  of 
determining  any  average  of  prices,  or  generalization  of 
causes  affecting  prices  during  the  years  mentioned,  would, 
without  proper  allowance,  completely  vitiate  any  conclu- 
sions. 

War  and  interruption  of  traffic  on  the  upper  Nile  have 
increased  the  prices  of  "  gum- Arabic  "  and  of  the  drug 
"  senna  "  in  recent  years  more  than  a  hundred  per  cent.  The 
prices  for  French  and  other  competing  light  wines  and 
brandies  are  much  higher  than  the  average  for  1866-'67, 
because  the  phylloxera  has  so  impaired  the  production  of 
French  vineyards  that  France  has  of  late  years  imported 
more  wine  than  she  exports.  "  Cochineal  "  and  "  madder  " 
have  greatly  declined  in  price  since  1873,  because  their  use 
as  dye-stuffs  has  been  to  a  great  extent  superseded  by  equiva- 
lent and  cheaper  color  ing- materials  derived  from  coal-tar ; 
and  within  a  very  recent  period  the  discovery  of  a  method 
of  cheaply  preparing  a  chemical  preparation  from  cloves, 
having  all  the  flavoring  qualities  of  the  vanilla-bean,  has 
already  diminished  the  demand,  and  bids  fair  to  greatly 


EXCEPTIONAL  CHANGES  IN  PRICES.  195 

impair  the  price  of  this  heretofore  scarce  and  costly  tropical 
product.  Certain  animal  products,  notably  entering  into 
commerce,  have  greatly  advanced  in  price  in  recent  years  by 
reason  of  a  rapid  diminution  in  the  number  of  the  animals 
affording  them,  as  buffalo-horns,  ivory,  and  whalebone. 
Ivory  has  trebled  in  price  since  1845,  and  whalebone  in- 
creased from  32|  cents  per  pound  in  1850  to  85  cents  in 
1870,  and  $3.50  in  1886. 

In  October,  1888,  according  to  a  circular  issued  by  the 
"  Baker's  Guide "  at  Havana,  Cuba,  the  price  of  bread  in 
that  city  was  lower  than  in  any  country,  either  in  America 
or  Europe,  where  wheat  is  produced.  The  reasons  assigned 
for  this  were  the  substitution  of  free  for  slave  labor,  and  the 
depreciation  of  paper  currency  in  comparison  with  gold : 
"  flour  on  the  date  mentioned  selling  at  $13  per  barrel  in 
gold,  and  paper  money  at  a  reduction  of  two  hundred  and 
forty  per  cent  from  gold  prices." 

The  price  of  manufactured  Mediterranean  coral — the 
trade  in  which  is  extensive — has  been  greatly  depressed  in 
recent  years  by  reason  of  the  discovery  of  new  banks  of  coral 
on  the  coast  of  Sicily,  from  which  the  raw  material  has  been 
obtained  most  cheaply,  and  in  large  excess  of  demand.  The 
consequent  decline  in  prices  has,  however,  opened  new 
markets  in  Africa,  where  the  natives  now  purchase  coral 
ornaments  in  place  of  beads  of  Venetian  and  German  manu- 
facture. 

HOPS. — Few  commodities  have  fluctuated  more  violently 
in  price  in  recent  years,  or  more  strikingly  illustrate  the 
degree  to  which  supply  and  demand  predominates  over  all 
other  agencies  in  determining  price,  than  the  vegetable 
product  hops.  In  1881  there  was  an  almost  universal  crop 
failure,  and  the  highest  grade  of  English  hops  (East  Kent) 
commanded  700s.  per  cwt.  In  1886  the  German  Hop- 
Growers'  Association  estimated  the  quantity  grown  through- 
out the  world  at  93,340  tons,  and  the  annual  consumption 
at  only  83,200  tons,  so  that  there  was  an  excess  of  production 


196  RECENT  ECONOMIC  CHANGES. 

over  consumption  for  that  year  of  nearly  10,000  tons.  As 
might  have  been  expected,  there  was  a  notable  decline  in 
the  world's  prices  for  hops,  and  the  same  quality  of  English 
hops  which  commanded  700s.  per  cwt.  in  1882  sold  for  74s. 
in  1887,  and  in  June,  1888,  for  68s.  Later  in  the  year,  with 
unfavorable  harvest  reports,  the  price  advanced  to  147s. 

DIAMONDS. — The  recent  price  experience  of  diamonds 
is  in  the  highest  degree  interesting.  Diamonds  were  first 
discovered  in  South  Africa  about  the  year  1868,  and  a  busi- 
ness of  searching  (mining)  for  them  immediately  sprang 
up.  At  the  outset  the  mining  was  conducted  by  individu- 
als, but,  in  consequence  of  the  expense,  the  work  gradually 
and  necessarily  passed  into  the  control  of  joint-stock  com- 
panies with  command  of  large  capital ;  and  it  was  not  until 
1880  that  operations  on  a  great  scale  were  undertaken.  The 
result  of  this  improved  system,  conjoined  with  underground 
mining,  was  such  an  increase  in  the  output  of  diamonds 
that  an  oversupply  to  the  market  and  a  serious  reduction 
in  price  became  imminent ;  and  the  period  of  1883-'84  was 
in  fact  one  of  falling  prices  and  intense  competition  among 
the  various  producing  companies,  during  which  the  leading 
companies  paid  little  or  nothing  to  their  shareholders,  and 
some  entirely  suspended  operations.*  Continued  disaster 
was,  however,  finally  arrested  through  a  practical  consoli- 
dation of  all  the  companies  for  the  purpose  of  controlling 
product  and  prices ;  and  a  revival  in  demand  having  oc- 
curred about  the  same  time,  average  prices  were  advanced 
between  1885  and  1887  from  20s.  5d.  per  carat  to  23s.  l^d. 

The  value  of  the  diamonds  exported  from  South  Africa 


*  The  "Kimberly  Central  Company" — the  leading  organization — which 
from  1880  to  1883  increased  its  dividend  from  ten  to  thirty  per  cent,  paid 
nothing  to  its  shareholders  during  1884  and  1885,  and  at  the  close  of  1886  was 
only  able  to  declare  a  dividend  of  five  per  cent.  The  other  great  diamond- 
mining  company,  the  "  De  Beers,"  was  more  fortunate,  and  paid  for  1884  to 
1886  an  average  of  about  eight  and  a  half  per  cent ;  but  most  of  the  companies 
paid  nothing  during  the  same  period,  and  some  entirely  suspended  mining. 


PRODUCTION  AND  PRICES  OF  DIAMONDS.        197 

since  the  first  discovery  of  the  mines,  or  from  1868  to  1887, 
is  believed  to  have  been  between  £40,000,000  and  £45,000,000 
($200,000,000  to  $225,000,000),  of  which  about  £15,500,000 
(177,500,000)  represents  the  value  of  the  output  from  1883 
to  1887.  Very  curiously,  this  large  export  of  value — nearly 
all  in  the  first  instance  to  England — seems  to  find  no  dis- 
tinctive place  in  the  columns  of  British  imports,  although 
they  have  served  in  a  large  measure  to  enable  South  Africa 
to  pay  for  her  imports  of  British  and  other  foreign  prod- 
ucts. If  the  export  of  diamonds  from  South  Africa  to 
Europe  has  aggregated  £45,000,000  ($225,000,000)  in  the 
rough,  the  process  of  cutting  may  be  regarded  as  having 
increased  their  market  value  full  one  hundred  per  cent, 
or  to  £90,000,000  (or  $437,000,000) ;  a  greater  value  than 
the  yield  of  the  world  during  the  two  preceding  centuries. 
The  aggregate  weight  of  the  entire  diamond  product  of  the 
South  African  mines  up  to  1887  is  estimated  at  38,000,000 
carats,  or  over  seven  and  a  half  tons.* 

We  have,  therefore,  in  this  experience,  the  phenomenon 
of  the  strangely  persistent  value  of  a  comparatively  useless 
gem,  during  a  period  when  the  prices  of  most  other  com- 
modities were  diminishing  by  leaps  and  bounds,  as  well  as 
the  extraordinary  concurrent  absorbent  power  of  the  world 
for  a  greatly  increased  product.  But  the  demand  for  dia- 
monds latterly  is  thought  not  to  have  kept  pace  with  their 
increasing  production ;  and  it  is  said  that  the  stock  of  dia- 


*  Of  this  immense  product  there  is  good  reason  for  believing  that  a  very 
large  proportion  found  a  market  in  the  United  States.  According  to  the 
customs  returns,  the  value  of  the  unset  diamonds  which  were  imported  into 
the  United  States,  and  paid  duty,  from  1877  to  1887,  inclusive,  was  in  excess 
of  $50,000,000 ;  and  it  can  hardly  be  doubted  that  an  equal  or  larger  import 
in  the  form  of  unset  stones  and  jewelry  escaped  during  the  same  period  the 
cognizance  of  the  revenue  officials.  The  value  of  the  present  annual  import 
of  precious  stones  not  set — mainly  diamonds — is  about  $10,000,000.  In  1868 
the  annual  value  of  a  corresponding  import  was  about  $1,000,000.  These 
data,  imperfect  as  they  are,  afford  some  indication  of  the  rapid  increase  in 
wealth  in  recent  years  among  the  people  of  the  United  States. 


198  RECENT  ECONOMIC  CHANGES. 

monds  in  the  hands  of  dealers  in  1888  was  fully  twenty-five 
per  cent  in  excess  of  their  requirements.  To  meet  and  neu- 
tralize the  influence  of  this  condition  of  affairs,  the  South 
African  diamonds-mining  companies  have  limited  produc- 
tion, which  for  the  time  has  advanced  prices.  But  the  ten- 
dency obviously  is  for  diamonds  to  decline  in  value ;  and  the 
wonder,  indeed,  is  that  this  has  not  happened  at  an  earlier 
date.  "  One  thing,  furthermore,  seems  certain,  and  that  is, 
that  when  the  breakdown  of  speculation  and  prices  does  oc- 
cur, the  consequences  will  be  singular  and  far-reaching.  For 
it  is  to  be  remembered  that  for  the  most  part  the  use  of  dia- 
monds is  a  mere  whim  of  fashion,  that  may  change  at  any 
time.  There  is  no  way  of  stimulating  the  demand  for  them, 
except  by  lowering  prices,  and,  of  course,  if  prices  were  ma- 
terially reduced,  the  wealthy  votaries  of  fashion  would  in- 
evitably cease  to  wear  diamonds,  and  would  take  up  some 
other  form  of  personal  adornment."  *  The  price  experiences 
of  diamonds  in  the  near  future  promises,  therefore,  to  be 
even  more  interesting  than  it  has  been  the  recent  past. 

In  the  United  States  during  recent  years  there  has  been 
a  remarkable  decline  in  the  price  of  hides  and  in  certain 
descriptions  of  leather ;  "  Buenos  Ayres  "  hides  having  sold 
in  May,  1889,  at  the  lowest  figures  for  thirty  years,  while 
the  leather-trade  generally  has  been  depressed  and  unsatis- 
factory. The  agency  occasioning  the  first  result  is  ascribed 
to  the  great  increase  in  the  supply  of  domestic  hides  conse- 
quent upon  a  notable  extension  of  the  American  (Western) 
cattle  industry ;  and,  in  the  case  of  the  second,  to  an  over- 
production and  decline  in  demand  for  upper  leather,  in  con- 
sequence of  a  change  in  fashion,  whereby  lighter  grades  of 
foot-wear  have  supplemented  the  use  of  "  leg-boots." 

The  extreme  fluctuation  in  recent  years  in  the  price  of 
certain  drugs  from  well-recognized  and  unmistakable  causes 
is  also  worthy  of  notice.  For  example,  "  Turkey  opium," 

*  London  "  Economist,"  March,  1888. 


PRICES  OF  DRUGS.  199 

a  standard  article  of  commerce,  which  in  1878  commanded 
17s.  per  case  in  the  London  market,  under  the  influence  of 
subsequent  unusually  large  crops  declined  in  1886  to  6s.  6d. 
for  prime  qualities.  In  1876-'78  there  was  so  little  demand 
for  the  drug  known  as  "  balsam  Tolu  "  that  it  seemed  not 
unlikely  that  its  production  and  market  supply  would  en- 
tirely cease.  In  later  years,  however,  it  was  discovered  that 
it  could  be  used  for  the  manufacture  of  "  chewing-gum  " — 
an  article  in  extensive  use  in  the  United  States — and  the 
demand  thus  occasioned  has  not  only  created  a  greater 
market  than  ever  before,  but  the  increased  production  has 
been  attended  with  a  reduction  of  from  sixty  to  seventy  per 
cent  in  price. 

The  British  Gold  and  Silver  Commission  call  attention, 
in  their  "  Final  Eeport,  1888  "  (pages  67  and  68),  to  three 
other  causes  of  an  exceptional  character  that  have  doubtless 
been  influential  in  determining  prices  in  a  greater  or  less 
degree  since  1873,  and  which  are  in  no  way  connected  with 
any  changes  in  the  relative  values  of  the  precious  metals. 
The  first  is  that  "  the  rise  in  the  price  of  raw  products  dur- 
ing the  period  preceding  1875  exceeded  the  average  rise  of 
the  prices  of  all  commodities,  while  the  fall  in  the  prices  of 
raw  products  since  1875  has  been  above  the  average  fall. 
Comparing,  therefore,  the  earlier  with  the  later  period,  the 
lower  cost  of  manufacture  was  in  the  earlier  period  counter- 
acted by  the  higher  cost  of  raw  materials,  while  in  the  later 
period  not  only  was  this  not  the  case,  but  the  cost  of  the 
raw  materials  has  decreased  simultaneously  with  the  dimin- 
ished cost  of  manufacture."  The  second  is  that,  comparing 
the  years  since  1873  with  previous  periods,  "  there  has  been 
a  remarkable  freedom  from  an  absorption  of  the  people  of 
the  Continent  of  Europe  in  occupations  of  war.  Their  en- 
ergies have  thus  been  turned  instead  to  industrial  and  com- 
mercial pursuits,  which  has  led  to  an  increase  in  their  power 
of  production."  A  third  cause  "  which  has  tended  to  lower 
certain  prices  in  the  open  markets  of  the  world,  from  which 


200  RECENT  ECONOMIC  CHANGES. 

the  *  index '  numbers  of  prices  are  taken,  has  been  the  in- 
crease in  protective  tariffs.  These  tariffs,  by  enabling  manu- 
facturers to  demand  high  prices  at  home,  have,  in  so  doing, 
enabled  them  to  throw  their  productions  at  an  unnaturally 
low  price  upon  foreign  markets.  In  the  case  of  bounties — 
e.  g.,  those  on  sugar — the  operation  of  protection  upon  prices 
has  been  more  direct ;  and  even  in  protected  countries,  while 
the  first  effect  of  protection  has  been  to  raise  prices,  the 
ultimate  effect  has  been  in  many  cases  to  produce  a  glut, 
and  make  it  difficult  for  the  protected  industries  to  get  rid 
of  their  stocks." 

The  divergency  in  the  price  movements  of  different  and 
special  commodities  has  also  been  very  notable — so  much  so 
that,  out  of  the  long  list  of  articles  embraced  in  the  numer- 
ous tables  that  have  been  prepared  by  European  economists 
for  determining  the  general  average  of  prices  during  recent 
periods,  the  price  movements  of  no  two  commodities  can  be 
fairly  regarded  as  harmonizing.  While  in  the  case  of  some 
staple  products  prices  fell  immediately  and  rapidly  after 
1873,  the  prices  of  others,  although  subjected  to  the  same 
gold-scarcity  influence,  and  "which  did  not  have  this  influ- 
ence neutralized  by  a  decline  of  production  concurrent  with 
continuing  demand,  exhibited  for  a  long  time  comparatively 
little  or  absolutely  no  disturbance.  This  was  especially  the 
case  in  respect  to  wool,  the  price  of  which,  long  after  metals, 
breadstuffs,  chemicals,  and  cotton  goods  had  succumbed  to 
the  wave  of  depression  subsequent  to  1873,  "  continued  "  (to 
use  the  language  of  the  trade)  "  remarkably  healthy,"  not- 
withstanding a  continually  increasing  product  was  recog- 
nized ;  and  it  was  not  until  1884  that  the  decline  in  the 
general  prices  of  this  commodity  gave  any  occasion  for 
anxiety. 

In  certain  tables  prepared  by  Dr.  Soetbeer,  one  hundred 
leading  commodities  are  divided  into  seven  classes.  Com- 
paring the  average  prices  of  these  classes  in  1886  with  those 
of  the  period  of  1871-'75 — which  last  immediately  preceded 


SOETBEEK'S  PRICE  TABLES.  201 

the  commencement  of  the  alleged  scarcity  of  gold — the  fol- 
lowing results  were  obtained :  There  was  a  fall  in  Class  I 
(agricultural  products)  of  thirty-one  per  cent ;  in  Class  II 
(cattle  and  fish  products)  of  twenty-three  per  cent ;  in  Class 
III  (tropical  fruits)  of  seven  per  cent ;  in  Class  IV  (colonial 
commodities)  of  twelve  per  cent ;  in  Class  V  (mining  and 
smelting  products)  of  forty  per  cent ;  in  Class  VI  (textile 
products)  of  twenty-four  per  cent;  in  Class  VII  (miscel- 
laneous articles)  of  thirty-two  per  cent. 

Careful  comparisons  of  price  movements  in  recent  years 
also  fail  to  show  any  exact  correspondence  of  results  as 
respects  different  countries,  the  average  fall  of  prices  having 
been  apparently  less  in  France  and  Germany  than  in  Great 
Britain  during  the  same  period ;  while  the  average  fall  in 
prices  in  the  United  States,  in  respect  to  all  those  commodi- 
ties which  enter  into  the  general  wants  of  man,  have  been 
undoubtedly  greater  than  in  any  other  country.* 

*  The  following  extract  from  the  "  Eeport  of  the  Chamber  of  Commerce  of 
Cincinnati,  Ohio,"  for  the  year  ending  August  31,  1886,  strikingly  illustrates 
the  extraordinary  decline  in  the  price  of  staple  commodities  in  this  great  in- 
terior market  of  the  North  American  Continent : 

"  There  is  one  condition  revealed  " — i.  e.,  by  the  statistics  of  18S5-'86 — 
"  that  is  very  noticeable,  which  is  that  prices  in  general  touched  the  lowest 
point  in  a  quarter  of  a  century.  There  were  those  who  supposed  that  the 
shrinking  processes  had  been  arrested  in  the  preceding  year,  and  yet  the  fig- 
ures for  1885-'86,  in  nearly  all  departments  of  business,  show  lower  prices 
than  the  previous  year.  In  presence  of  the  low  prices  of  1884r-'85,  it  seemed 
almost  incredible  that  so  much  of  market  value  could  be  wrung  from  them  as 
has  been  during  the  past  year.  Thus,  commencing  near  the  alphabetical  list, 
bran  declined  9  per  cent ;  creamery  butter,  20'7  ;  butterine,  18 ;  candles,  18*7 ; 
soap,  15-2;  cattle,  8;  coal,  delivered,  7'8;  middling  cotton,  11-9;  feathers, 
6'7 ;  dried  apples,  27'4 ;  No.  2  mixed  (shelled)  corn,  14'6 ;  No.  2  oats,  5-3 ; 
New- Orleans  molasses,  11/6;  Louisiana  rice,  13*1 ;  hay,  5  ;  hops,  25'2;  mess- 
pork,  21'1;  prime  lard,  10'7;  lard-oil,  11-7;  tallow,  22;  white-leaf  tobacco, 
25 ;  flax-seed,  18'4 ;  starch,  13*4 ;  high  wines,  not  including  the  taxes,  16'3. 
In  a  few  articles — tanners'  bark,  clover-seed,  lead,  barley,  wool,  etc. — there 
was  an  advance ;  yet  the  number  is  so  small  as  to  make  them  quite  excep- 
tional. 

"  While  the  depreciation  which  has  taken  place  the  past  year  (1885-'86), 
compared  with  the  prices  of  1884-'85,  has  been  marked,  it  may  be  interesting 


202  RECENT  ECONOMIC  CHANGES. 

Now,  while  such  results  are  not  in  accordance  with  what 
might  have  been  anticipated  from  and  can  not  be  satisfac- 
torily explained  by  any  theory  of  the  predominating  and 
depressing  influence  of  a  scarcity  of  gold  on  prices,  they  are 
exactly  the  results  which  might  have  been  expected  from 
and  can  be  satisfactorily  explained  by  the  conditions  of 
supply  and  demand — conditions  so  varying  with  time,  place, 
and  circumstance  as  to  require  in  the  case  of  every  com- 
modity a  special  examination  to  determine  its  price-experi- 
ence, and  which  experience,  once  recognized,  will  rarely  or 
never  be  found  to  exactly  correspond  with  the  experience  of 
any  other  commodity ;  the  leading  factor  occasioning  the 
recent  decline  in  the  prices  of  sugars  having  been  an  ex- 
traordinary artificial  stimulus;  in  quinine,  the  changes  in 
the  sources  of  supply  from  natural  to  artificially  cultivated 
trees;  in  wheat,  the  accessibility  of  new  and  fertile  terri- 
tory, and  a  reduction  of  freights ;  in  freights,  on  land,  the 
reduction  in  the  cost  of  iron  and  steel,  and  on  the  ocean  new 
methods  of  propulsion,  economy  in  fuel  and  undue  multi- 

to  take  a  glance  at  the  tremendous  reduction  which  has  taken  place  in  the  past 
five  years,  which,  in  articles  that  enter  into  the  every-day  wants  of  man,  in 
not  a  few  instances  has  been  equal  to  almost  one  half  their  value  in  1881-' 82. 
The  gravitation  to  a  lower  plane  of  value  has  been  so  steady  as  to  prevent  a 
full  appreciation  of  the  enormous  shrinkage  to  which  commodities  have  been 
subjected.  Thus,  in  mess-pork  the  depreciation  in  the  general  average  price 
since  1881-'S2  has  been  48 -5  per  cent;  in  prime  steam  lard,  46  ;  hams,  24-4; 
shelled  corn,  43 ;  oats  (which  in  Europe  have  shown  no  tendency  in  recent 
years  to  fall  in  price),  39'4 ;  rye,  32-6 ;  bran,  33-8 ;  extra  butter,  46-9 ;  tallow, 
41 -4;  flour,  34-3;  linseed-oil,  30;  salt,  18'6;  cheese,  17'1 ;  fair  to  medium 
cattle,  18-3 ;  middling  cotton,  21'7 ;  Louisiana  rice,  28-9 ;  barley,  18-6 ;  and 
wool,  15  per  cent." 

The  report  for  the  year  ending  August,  1887,  thus  further  states  the  experi- 
ence of  the  Cincinnati  market :  "  Low  as  were  the  prices  of  breadstufls  in  the 
previous  year,  they  touched  in  the  past  year  (1887)  still  lower  points.  The 
same  is  true  of  cattle,  sheep,  molasses,  sugar,  rice,  sirups,  salt,  and,  during 
most  of  the  year,  potatoes.  The  food  of  the  people,  in  general,  was  cheap, 
the  labor  of  the  country  never  having  received  a  larger  return,  in  actual  neces- 
sities and  comforts,  for  wages  received.  The  working  forces  of  the  country 
are  so  productive  that  it  furnishes  either  a  constant  pressure  in  the  direction 
of  lower  prices  or  resistance  to  advance." 


SPECIAL  PRICE  INFLUENCES.  203 

plication  of  vessels;  in  iron  and  steel,  new  processes  and 
new  furnaces,  affording  a  larger  and  better  product  with 
less  labor  in  a  given  time;  in  certain  varieties  of  wool, 
changes  in  fashion,  and  in  others  an  increase  of  production 
in  a  greater  ratio  than  population  and  their  consuming 
capacity ;  in  ores  and  coal,  the  introduction  of  the  steam- 
drill  and  more  powerful  explosive  agents ;  in  cheese,  a  dis- 
proportionate market  price  for  butter;  in  cotton  cloth, 
because  the  spindles  which  revolved  four  thousand  times  in 
a  minute  in  1874  made  ten  thousand  revolutions  in  the 
same  time  in  1885  ;  in  "  gum-arabic  "  and  "  senna,"  a  war 
in  the  Soudan ;  in  wines,  a  destruction  of  the  vines  by  dis- 
ease ;  in  American  hog-products,  a  plentiful  supply  of  hogs, 
consequent  upon  an  abundant  corn  (maize)  crop,  etc.  And 
yet  all  these  so  diverse  factors  of  influence  evolve  and  har- 
monize under,  and  at  the  same  time  demonstrate,  the  exist- 
ence of  a  law  more  immutable  than  any  other  in  economic 
science — namely,  that  when  production  increases  in  excess 
of  current  market  demand,  even  to  the  extent  of  an  incon- 
siderable fraction,  or  is  cheapened  through  any  agency, 
prices  will  decline ;  and  that  when,  on  the  other  hand,  pro- 
duction is  checked  or  arrested  by  natural  events — storms, 
pestilence,  extremes  of  temperature — or  by  artificial  inter- 
ference— as  war,  excessive  taxation,  or  political  misrule  or 
disturbances — prices  will  advance;  and,  between  these  ex- 
tremes of  influence,  prices  will  fluctuate  in  accordance  with 
the  progressive  changes  in  circumstances  and  the  hopes  and 
fears  of  producers,  exchangers,  and  consumers.* 

*  In  new  countries,  or  countries  where  industry  is  confined  to  the  produc- 
tion of  a  few  staple  products,  like  wool,  wheat,  sugar,  etc.,  a  decline  in  prices 
exerts  a  wider  and  much  more  disturbing  influence  than  in  countries  where 
there  is  great  diversity  of  industry,  and  where  the  sources  of  income  and  the 
opportunities  for  employment  are  more  numerous  and  more  varied.  In  the 
latter  all  branches  of  industry  are  rarely  depressed  at  the  same  time,  and  pros- 
perity in  some  compensates  to  a  certain  extent  for  adversity  in  others.  But, 
in  countries  of  inferior  industrial  organization  and  diversification,  the  interests 
of  the  entire  community  are  so  common  and  united  that  the  tendency  ia 


204  RECENT  ECONOMIC  CHANGES. 

It  should  also  not  be  overlooked  that  extraordinary  price 
movements — mainly  but  not  exclusively  in  the  direction  of 
further  decline,  and  as  the  result  of  continually  changing 
conditions  in  the  production  and  supply  of  commodities — 
are  constantly  occurring,  and  are  likely  to  continue  to  occur, 
unless  further  material  progress  is  in  some  way  to  be  ar- 
rested. Bessemer-steel  rails,  which  commanded  £4  5s.  in 
Great  Britain  in  1886,  sold  in  Belgium  in  June,  1887,  for 
£3  16s. ;  sugar,  which  was  thought  to  have  touched  the  low- 
est possible  price  in  July,  1886 — 2-92  cents  per  pound  in 
New  York  (for  fair  refining  in  bond),  sold  in  July,  1887,  in 
the  same  market,  for  2'37£  cents,  and  in  1888  for  3-09 ;  cop- 
per, which  brought  25  cents  per  pound  in  New  York  in 
1880,  sold  for  9$  cents  in  1886,  llj  cents  in  1887,  and  16f 
cents  in  1888 ;  quicksilver,  which  sold  for  $118  per  flask  in 
San  Francisco  in  1874,  sold  for  $26  in  1884  and  $50  in  1887. 
Sulphate  of  quinine,  which  sold  in  1885  for  2s.  6d.  per  ounce 
(sixty  cents),  in  1887,  owing  to  continued  cheapening  in  the 
production  and  transportation  of  cinchona-barks  and  im- 
provements in  manufacture,  sold  for  Is.  Gd.  (thirty  cents), 
and  one  of  the  largest  of  the  world's  manufacturers  of  qui- 
nine, under  date  of  September,  1887,  writes,  "  No  one  can 
predict  the  future  prices  of  this  product,  as  all  past  experience 
goes  for  naught."  "Manila"  and  "Sisal"  hemps,  on  the 
other  hand,  with  an  admitted  notable  increase  in  annual 
market  supply,  advanced  in  price  fully  one  hundred  per  cent 
between  the  1st  of  January,  1887,  and  the  corresponding 
period  in  1889,  because  under  the  new  methods  of  binding 
the  sheaves  of  American  grain  the  demand  for  coarse  twines 
has  been  in  excess  of  supply. 

always,  for  a  change  of  price  in  one  commodity — either  rise  or  fall — to  unduly 
influence  the  prices  of  all  commodities.  And  this,  according  to  the  London 
"  Statist,"  is  what  has  been  particularly  noticeable  in  Australia,  where  such 
a  sympathy  obtains  between  the  three  great  products  of  that  country — wool, 
wheat,  and  copper — that  it  rarely  happens  that  one  of  them  droops  in  price 
without  the  price  of  the  others  rapidly  weakening. 


CONFLICT  OF  OPINIONS.  205 

Such,  then,  are  the  leading  and  admitted  facts  illustra- 
tive of  the  nature  and  extent  of  the  extraordinary  and  most 
extensive  decline  in  prices  which  has  occurred  in  recent 
years,  and  which  has  been  the  most  apparent  and  proximate 
(but  not  the  ultimate)  cause  of  the  period  of  economic  dis- 
turbance which,  commencing  in  1873,  still  exists,  and  seems 
certain  to  last  for  some  time  longer.  Such,  also,  is  a  sum- 
mary of  the  evidence  in  support  of  the  view  that  this  recent 
phenomenal  decline  of  prices  is  due  so  largely  to  the  great 
multiplication  and  cheapening  of  commodities  through  new 
conditions  of  production  and  distribution,  that  the  influence 
of  any  or  all  other  causes  combined  in  contributing  to  such 
a  result  has-  been  very  inconsiderable,  if  not  wholly  inappre- 
ciable. 

It  is  not,  however,  to  be  concealed  that  numerous  econo- 
mists and  statisticians  of  high  repute — M.  Sauerbeck  and 
others — are  nevertheless  of  the  opinion  that,  allowing  all 
that  has  been  claimed  for  the  influence  on  prices  occasioned 
by  reduction  of  cost  through  increased  and  cheapened  pro- 
duction and  distribution,  the  decline  in  recent  years  is  too 
great  to  be  "  simply  explained  away "  by  these  agencies 
But  these  authorities  have  specified  no  commodities,  the 
analysis  of  whose  production  and  price-experiences  in  recent 
years  furnish  any  sufficient  foundation  for  such  a  general 
conclusion ;  and  -it  is  interesting  to  note  how  the  experiences 
of  the  few — as  has  been  pointed  out  in  the  case  of  wool  and 
silk — which  at  first  thought  would  seem  to  indicate  the 
sensible  influence  of  "  other  "  agencies,  on  analysis  prove  to 
the  contrary.  Reasoning  also  from  what  may  be  termed 
the  gold  standpoint,  the  evidence  to  the  same  effect  is  not 
less  conclusive.  It  would  seem,  in  the  first  place,  that  if 
the  scarcity  influence  of  gold  on  prices  had  originated  and 
operated  as  the  advocates  of  this  theory  claim,  such  influence 
would  have  been  as  all-pervasive,  synchronous,  irresistible, 
and  constant  as  the  influence  of  gravitation ;  and  that  some- 
thing of  correspondence,  as  respects  time  and  degree,  in  the 
10 


206  RECENT  ECONOMIC  CHANGES. 

resulting  price-movements  of  commodities,  would  have  been 
recognized.  But  no  such  correspondence,  as  has  been  shown 
by  examples,  has  been  or  can  be  established.  On  the  con- 
trary, the  movement  of  general  prices  since  1873 — although 
generally  downward — has  been  exceedingly  irregular;  de- 
clining until  1878-'79;  then  rising  until  1882-'83;  then 
again  declining  to  an  almost  unprecedented  low  average  in 
1886 ;  and  in  the  year  1887  exhibiting,  in  respect  to  some 
commodities,  a  slight  upward  tendency,  which  in  1888-'89 
was  even  more  pronounced.  It  might  also  have  been  ex- 
pected that  the  influence  of  a  scarcity  of  gold  would  have 
especially  manifested  itself  at  or  shortly  subsequent  to  the 
time  (1873-'74)  when  Germany,  having  demonetized  silver, 
was  absorbing  gold,  and  France  and  the  Latin  Union  were 
suspending  the  coinage  of  silver.  But  the  years  from  1875 
to  1879,  inclusive,  taking  the  English  market  as  the  criterion, 
were  characterized  generally  by  an  ^excessive  supply  of  money 
and  currency  of  all  kinds ;  and  the  same  has  been  true  of 
the  period  from  1880Jbq4886-'87,  when,  if  the  supply  of 
money  from  gold  was  constantly  diminishing,  contrary  re- 
sults would  seem  to  have  been  inevitable.* 


*  It  has,  however,  been  urged  in  opposition  to  this  view  that,  when  from  any 
causes  prices  fall,  "  there  will  always  be  an  excessive  supply  of  money  seeking 
investments  at  the  money  centers,"  and  that  "  the  supply  of  money  may  have 
diminished,  but  in  the  face  of  falling  prices  the  demand  for  it  will  naturally 
have  diminished  faster  still."  To  this  it  may  be  answered  that,  when  falling 
prices  are  accompanied  or  occasioned  by  diminished  trade,  the  above  infer- 
ences may  be  true ;  but,  in  the  phenomenal  period  under  consideration,  prices 
have  fallen  greatly  without  any  diminution  of  the  volume  of  trade.  In  fact, 
the  volume  of  trade,  or  the  quantities  of  commodities  produced,  moved,  and 
exchanged,  has  never  been  so  great  in  the  history  of  the  world  as  during  the 
last  ten  or  fifteen  years ;  and  the  so-called  depression  of  trade  during  this 
time  has  been  mainly  due  to  a  reductionj>f_pjx>fit8_  to  such  an  extent  that,  as 
the  expression  goes,  "  it  has  not  paid  to  do  business,"  which  in  turn  has  been 
occasioned  by  an  intense  competition  in  all  markets  to  dispose  of  an  excess  of 
product.  Under  such  circumstances  there  is  no  reason  to  believe  that  the 
demand  for  money  has  diminished  faster  than  prices  have  fallen,  or  to  doubt 
that,  if  there  had  been  any  real  scarcity  of  gold,  it  would  have  failed  to  mani- 
fest itself. 


HAS  GOLD  BECOME  SCARCE?         207 

But  a  more  interesting  question,  and  one  more  pertinent 
to  this  discussion  than  any  other,  is,  has  gold,  in  recent  years, 
as  an  instrumentality  for  effecting  exchanges  (by  measuring 
the  relation  between  the  various  commodities  and  things 
exchanged),  really  become  scarce — at  least  to  the  extent  of 
occasioning,  through  its  increase  of  value  or  purchasing 
power,  a  considerable  fall  in  the  prices  of  all  commodities  ? 
And  on  this  point  the  following  is  a  summary  of  the  evi- 
dence in  favor  of  and  in  contravention  of  such  a  supposi- 
tion.* The  position  taken  by  the  advocates  or  believers 
in  the  gold-scarcity  theory,  is,  in  brief,  that  the  production 
of  gold  in  recent  years  has  largely  fallen  off  and  become 
wholly  inadequate  to  meet  the  demands  for  coinage  con- 
tingent on  the  increase  in  the  world's  trade,  wealth,  and 
population ;  and  further,  and  as  a  direct  consequent,  that 
trade  everywhere  has  been  obstructed  and  depressed ;  that 
prices,  profits,  and  wages  have  fallen,  and  the  burden 
of  public  debts  and  of  taxation  in  general  has  been  aug- 
mented. 

That  the  world's  annual  product  of  gold — consequent 
mainly  upon  the  exhaustion  of  the  mines  of  California  and 
Australia — has  largely  diminished  in  recent  years  is  not  dis- 
puted. Opinions  as  to  the  extent  of  this  reduction  of  sup- 
ply vary  somewhat,  but  the  following  estimates  of  Dr.  Soet- 
beer  of  the  total  annual  average  production  since  1851  are 
accepted  as  approximately  accurate : 


*  To  avoid  confusion  of  ideas  on  this  subject,  it  is  desirable  that  the  reader 
should  keep  clearly  in  view  that  price  is  the  expression  of  the  value  of  a  com- 
modity in  terms  of  money,  and  that  the  expressions,  "fall  in  prices"  and 
"  appreciation  of  gold,"  for  purposes  of  the  present  discussion,  mean  really 
one  and  the  same  thing.  "  If  you  have  a  fall  in  prices,  you  have  an  apprecia- 
tion of  gold ;  and  if  you  have  an  appreciation  of  gold,  you  have  a  fall  in 
prices."  The  problem  presented  is,  therefore,  not  has  gold  appreciated  in 
value  or  purchasing  power — for,  a  fall  in  prices  being  admitted,  such  a  result 
becomes  inevitable  and  coincident — but  has  its  appreciation  been  due  to  some- 
thing that  has  befallen  commodities,  or  something  that  has  befallen  gold  itself, 
such  as  scarcity  of  supply  or  extraordinary  demand  ? 


208  RECENT  ECONOMIC  CHANGES. 

1851-'55 £27,815,400  $135,182,844 

1856-'60 28,144,900  137,784,415 

1866-'70 27,206,900  132,225,534 

1876-'80 24,052,200  116,893,692 

1881-'85 20,804,900  101,111,814 

For  the  year  1888  the  estimate  is  ("  New  York  Financial 
Chronicle  ")  £19,056,782,  or  $92,575,000.  The  estimates  of 
experts  as  to  the  proportion  of  the  annual  product  of  gold 
which  is  available  for  coinage  purposes  vary  considerably ; 
the  uncertain  elements  in  the  case  being  the  amount  of  gold 
that  is  recoined  and  the  proportion  that  is  used  in  the  arts 
and  manufactures. 

That  trade,  in  the  sense  of  diminishing  volume,  has  not 
been  obstructed,  and  that  the  decline  in  prices  in  recent 
years  has  not  been  occasioned,  to  any  appreciable  extent,  by 
reason  of  the  scarcity  of  gold,  would  appear  to  be  demon- 
strated by  the  evidence  that  has  been  herewith  presented. 
For  the  assertion  that  wages,  generally,  have  fallen,  there  is 
absolutely  no  foundation,  as  will  be  shown  hereafter.  That 
profits  have  fallen  must  be  admitted ;  but  such  a  result  has 
been  due,  in  almost  every  case,  to  the  severe  competition 
engendered  by  the  desire  to  effect  sales  in  face  of  a  con- 
tinued supply  of  commodities  in  excess  of  any  current 
market  demand ;  while  in  contravention  of  the  assumption 
that  the  supply  of  gold  in  recent  years  has  been  inadequate 
to  meet  the  increased  demands  of  the  world  for  coinage, 
etc.,  the  following  facts  are  in  the  highest  degree  pertinent, 
if  not  wholly  conclusive : 

No  one  doubts  that  the  amount  of  gold  in  the  civilized 
countries  of  the  world  has  largely  increased  in  recent  years. 
According  to  Dr.  Soetbeer,*  the  monetary  stock  of  gold  and 
gold  reserve  in  the  treasuries  and  principal  banks  of  civilized 
countries  has  shown  an  increase  for  every  decade  since  1850, 
and  at  the  end  of  1885  was  nearly  four  times  what  it  was  in 

*  Soetbeer's  "  Materialien,"  second  edition,  1886,  p.  47. 


RECENT  SUPPLY  OP  GOLD.         209 

1850 ;  so  that,  instead  of  there  being  a  reduced  supply  of 
gold,  as  compared  with  thirty-five  years  ago,  there  is  a  greatly 
increased  supply. 

Prof.  Laughlin  estimates  this  increase  to  have  been 
"  from  $477,000,000  in  1870-'80  to  $836,000,000  in  1885." 
In  1871-'74  there  was,  according  to  the  same  authority, 
"  $1  in  gold  for  every  $3.60  of  the  paper  circulation  of  the 
banks  of  the  civilized  world ;  in  1885  there  was  $1  of  gold 
for  every  $2.40 ;  the  total  note  circulation  increasing  during 
the  same  time  to  the  extent  of  $464,000,000,  or  twenty-nine 
per  cent."  In  1870-'74  the  gold  reserves  amounted  to 
twenty-eight  per  cent  of  the  total  note  circulation,  and 
sixty-four  per  cent  of  all  the  specie  reserves ;  in  1885  "  the 
gold  bore  a  larger  ratio  to  a  larger  issue  of  paper,  or  forty- 
one  per  cent  of  the  total  note  circulation,  and  seventy-one 
per  cent  of  the  specie  reserves.  This,"  as  Prof.  Laughlin 
remarks,  "  is  a  very  significant  showing.  What  it  means, 
beyond  a  shadow  of  doubt,  is  that  the  supply  of  gold  is  so 
abundant  that  the  character  and  safety  of  the  note  circula- 
tion have  been  improved  in  a  signal  manner." 

The  investigations  of  Mr.  Atkinson  have  also  led  him  to 
the  conclusion  that,  while  the  population  of  the  world  since 
1849  has  increased  about  forty  per  cent,  the  concurrent  in- 
crease in  the  volume  of  the  money  metals  has  been  fully  one 
hundred  per  cent,  and  that  the  value  of  the  gold,  added  to 
the  circulation  during  that  period,  was  more  than  double 
that  of  the  silver  added.* 

*  "  We  are  substantially  certain  that  the  quantity  of  gold  and  silver  com- 
bined which  has  been  added  to  the  circulation  of  the  money  metals  between 
the  year  1860  and  the  year  1885  exceeds  the  total  quantity  which  was  in  use  in 
1850.  That  is  to  say,  that  portion  of  the  world's  product  of  gold  and  silver 
which  has  been  added  to  the  circulation  for  use  as  money  between  these  dates, 
has  increased  the  total  amount  in  circulation  more  than  one  hundred  per  cent. 
Did  the  population  of  the  globe  increase  more  than  one  hundred  per  cent  in 
this  period?  To  this  question  a  negative  answer  may  be  given  with  equal 
assurance.  The  increase  of  population  in  the  civilized  states  of  the  world, 
now  numbering  only  a  little  over  four  hundred  millions,  has  been  only  forty- 


210  RECENT  ECONOMIC  CHANGES. 

Since  1873-'74  Germany  has  radically  modified  her  me- 
tallic circulation,  giving  preference  to  and  using  additional 
gold,  and  the  United  States  and  Italy  have  resumed  specie 
payments.  But  the  supply  of  gold  has  been  sufficient  to 
give  to  these  nations  all  the  gold  that  they  required,  with- 
out apparently  affecting  the  requirements  of  other  countries. 
Again,  it  is  not  disputed  that  the  rate  of  interest  and  dis- 
count has  declined  in  all  these  countries — like  Germany, 
the  United  States,  Scandinavia,  Holland,  and  Italy — which 
in  recent  years  have  increased  their  demand  and  use  of  gold 
for  coinage ;  whereas  a  scarcity  of  money  resulting  from  a 
scarcity  of  gold  ought  to  have  produced  just  the  contrary 
effect. 

The  present  annual  production  of  gold  is  enormous  com- 
pared with  any  period  antecedent  to  1850.*  Between  1820- 
1830  its  average  annual  production  was  $10,000,000 ;  be- 
tween 1831-1840  it  was  $14,151,000;  and  between  1840- 
1850,  $38,194,000.  It  was  at  its  highest  figure— $170,000,000 
to  $180,000,000— in  1852 ;  averaged  $101,000,000  from  1881 
to  1885 ;  and  (according  to  the  estimates  of  the  Director  of 
the  United  States  Mint)  was  $103,000,000  in  1885,  and 
$99,000,000  in  1886. 

The  production  of  silver  has  also  largely  increased  in 
recent  years  ($39,000,000  in  1850,  $64,000,000  in  1873,  and 
$135,000,000  in  1887),  and  no  evidence  can  be  produced  to 
show  that  there  has  been  any  actual  diminution  in  its  aggre- 

two  per  cent  in  this  period ;  can  the  remainder  have  increased  in  greater 
measure  ?  Surely  not.  Hence  it  follows  that  such  an  addition  of  gold  and 
silver  has  been  made  to  the  money  metals  since  1850  as  would  have  caused 
them  to  depreciate  between  these  two  dates  had  the  simple  quantity  or  volume 
of  money  in  circulation  per  capita  been  the  only  element  in  the  problem. 

"  It  is  also  a  well-known  and  fully  ascertained  fact  that  between  these  two 
dates  the  value  of  the  gold  added  to  the  circulation  of  the  world  very  far  ex- 
ceeded the  value  of  the  silver,  the  ratio  or  valuation  of  silver  being  computed 
at fifteen  and  one  half  pounds  of  silver  to  one  of  gold." — EDWABD  ATKINSON. 

*  "  In  the  last  thirty-five  years,  one  and  one  third  times  as  much  gold  has 
been  produced  as  in  the  three  hundred  and  fifty-eight  years  preceding  1850." 
— LAUOHLIN. 


ECONOMY  IN  THE   USE  OF  MONEY.  211 

gate  use  by  reason  of  its  so-called  "  demonetization  "  in  any 
country. 

Now,  while  the  supply  of  the  precious  metals  for  money 
purposes  has  been  amply  sufficient  to  meet  all  requirements, 
there  is  abundant  evidence  in  proof  that  the  use  of  metallic 
money  for  the  purpose  of  effecting  exchanges  has  been  greatly 
supplemented  in  recent  years  through  numerous  and  varied 
agencies.  "In  America,  France,  and  Germany  there  are 
besides  gold  coins  immense  sums  of  silver  money,  paper 
money,  and  uncovered  bank-notes ;  and  these  media  of  cir- 
culation are  fully  equivalent  to  gold  in  value,  owing  to  pub- 
lic or  private  credit ;  and,  therefore,  in  the  figures  of  prices 
they  have  the  same  influence  in  commerce  as  a  correspond- 
ing amount  of  gold  money  would  have."  * 

Never  before  in  the  history  of  the  world  have  there  been 
so  many  and  such  successful  devices  invented  and  adopted 
for  economizing  the  use  of  money.  Every  increase  in  facil- 
ities for  banking  and  for  the  granting  and  extension  of 
credits  largely  contributes  to  this  result ;  the  countries  en- 
joying the  maximum  of  such  facilities  requiring  the  small- 
est comparative  amount  of  coin  for  their  commercial  tran- 
sactions. In  the  United  States  the  number  of  national 

*  "  In  France  in  latter  years  we  find  in  the  vaults  of  the  Bank  of  France  a 
cash  reserve  of  1,100  to  1,200  francs  in  gold,  and  a  like  amount  in  silver  of 
legal  tender.  Besides  this,  the  note  circulation  amounts  to  2,600,000,000  to 
2,700,000,000  francs,  and  is,  therefore,  covered  to  the  extent  of  nearly  half  in 
gold  and  nearly  five  sixths  in  metal.  Were  there  an  increased  demand  for 
circulation,  there  could  be — political  quiet  and  peace  being  assured — an  issue 
of  500,000,000  to  600,000,000  francs  more  in  notes  covered  by  the  existing  cash 
reserve  without  causing  thereby  the  least  injury  to  credit. 

"  In  Germany,  too,  there  can  be  no  talk  of  any  dearth  of  circulation  so 
long  as  the  Imperial  Bank  holds  a  cash  reserve  of  650,000,000  to  750,000,000 
marks  in  gold  and  silver,  which  is  treble  the  sum  which  before  1870  was 
quite  sufficient  for  the  Prussian  Bank.  Nearly  chrce  fourths  of  the  amount  of 
the  notes  issued  by  the  Imperial  Bank  and  the  other  banks  of  issue  are  usu- 
ally metallically  covered,  and  therefore  the  issue  of  notes  could,  if  it  was  only 
a  question  of  the  credit  of  the  notes,  be  increased  by  the  sum  of  some  100,000,- 
000  marks  on  the  present  cash  reserve." — PROF.  LEXIS,  Gottingen,  Answer  to 
Circular  Letter  of  British  Gold  and  Silver  Commission,  1888. 


212  RECENT  ECONOMIC  CHANGES. 

banks  increased  from  2,052  in  December,  1879,  to  3,151  in 
December,  1888,  or  in  the  ratio  of  over  fifty-three  per  cent. 
During  the  same  period  their  capital,  surplus,  and  undi- 
vided profits  increased  38'5  per  cent,  and  their  loans  and 
discounts  seventy-nine  and  a  half  per  cent.  In  England, 
Scotland,  Ireland,  and  the  Channel  Islands  there  were  2,417 
banking  offices  in  1865,  and  3,886  in  1885 — an  increase 
which  is  regarded  as  extraordinary.  The  total  banking  de- 
posits of  England,  which  were  estimated  (at  one  moment) 
at  £676,000,000  in  1874,  were  £760,000,000  in  1884— an  in- 
crease of  £84,000,000  ($408,000,000)  in  nine  years,  and  this 
notwithstanding  the  concurrent  great  fall  in  prices.  "In 
Germany,  a  system  of  deposit  accounts  began  at  the  Im- 
perial Bank  in  1876 ;  since  then  they  have  grown  to  more 
than  350,000,000  marks  ($85,000,000).  Of  these  deposits,  the 
owners  can  at  any  time  avail  themselves  by  means  of  checks, 
and  make  their  payments  throughout  the  whole  empire 
without  any  expense."  To  this  must  be  added  the  progress 
made  in  Germany  in  recent  years  in  the  absorption  and 
utilization  of  the  very  smallest  reserves  of  money  through 
the  savings-banks  system.  "There  are  now  scarcely  any 
peasants  left  in  Germany  who  keep  ready  money  on  hand 
to  any  considerable  amount ;  and  in  families,  in  which  a  few 
decades  ago,  every  child  possessed  his  money-box  filled  with 
gold  and  silver  pieces,  now  every  child  has  his  savings-bank 
book." — Prof.  NASSE,  of  Bonn. 

The  great  reduction  in  the  time  and  cost  of  distribution 
of  commodities,  and  the  facility  with  which  purchases  can 
be  made  and  credits  transmitted  by  telegraph,  have  also  re- 
sulted, not  only  in  an  enormous  saving  of  capital,  but  also 
in  an  ability  to  transact  an  increased  business  with  dimin- 
ished necessity  for  the  absorption  and  use  of  actual  money. 
A  most  striking  illustration  in  proof  of  this,  given  by  Mr. 
Fowler  ("  Appreciation  of  Gold,"  London,  1885),  is,  that 
while  the  total  British  export  and  import  trade,  aggregating 
£6,000,000,000  from  1866  to  1875,  was  accompanied  by  an 


INTERNATIONAL  BALANCES.  213 

aggregate  export  and  import  of  £530,000,000  of  bullion  and 
specie,  an  aggregate  value  from  1876  to  1885  of  £6,700,000,- 
000,  was  moved  with  the  aid  of  only  £439,000,000  of  bullion 
and  specie.  The  same  authority  refers  to  an  eminent  Eng- 
lish firm  doing  business  with  the  East,  as  stating  that  "  their 
business  could  now  be  conducted  with  one  fifth  of  the  capi- 
tal formerly  employed,"  which  would  seem  to  warrant  the 
inference  that  the  reduction  in  the  necessity  for  using  so 
much  of  their  capital  as  was  represented  by  money  had  also 
been  proportionate. 

For  the  settlement  of  international  balances — a  large 
function  of  gold — it  is  certain  that  every  ounce  of  this  metal 
— through  the  great  reduction  in  the  time  of  ocean-transits 
— is  at  the  present  time  capable  of  performing  far  more 
service  than  at  any  former  period ;  the  time  for  the  trans- 
mission of  coin  and  bullion  having  been  reduced  in  recent 
years  between  Australia  and  England  from  ninety  to  forty 
days,  and  from  New  York  to  Liverpool  from  twelve  or  fif- 
teen to  eight  or  nine  days.  Such  an  increase  of  rapidity  in 
doing  work  is  certainly  equivalent  to  increase  in  quantity. 

The  very  great  change  which  has  taken  place  in  the 
United  States  in  this  respect  is  thus  noticed  in  the  report 
of  the  United  States  Controller  of  the  Currency  for  1888  : 

"  Of  late  years  the  gold  movement  across  the  Atlantic  has  become 
much  more  sluggish,  because  something  has  been  found  to  take  its 
place,  and  to  some  extent,  at  least,  to  serve  the  purpose  of  regulating 
exchanges  and  transferring  capital.  Certain  securities  on  the  New 
York  stock-list  have  come  to  be  largely  and  constantly  dealt  in  at  the 
European  monetary  centers,  and  as,  by  means  of  cable  communication 
and  through  the  close  competition  of  dealers,  their  values  are  gener- 
ally at  a  level  in  all  markets,  they  supply  a  cheaper  means  of  settle- 
ment than  gold,  and  a  more  convenient  basis  for  exchange  operations." 
These  securities  "  have  become  the  stock  in  trade  of  dealers  in  foreign 
exchange ;  they  are  shipped  back  and  forth  according  as  exchange 
quotations  fluctuate ;  indeed,  in  many  cases  they  are  not  even  shipped ; 
the  ownership  is  transferred  by  a  cablegram,  and  this  transfer  supplies 
a  basis  for  bills  of  credit.  Before  this  new  business  came  in,  the 


214  RECENT  ECONOMIC  CHANGES. 

dealers  in  foreign  exchange,  being  dependent  wholly  upon  gold  to  set- 
tle their  balances,  or  to  serve  as  a  basis  for  drafts  or  credits  whenever 
the  supply  of  commercial  bills  proved  insufficient,  were  compelled  to 
carry  a  stock  of  coin,  or  bullion,  and  this  constituted  a  fund  apart 
from  the  general  monetary  stock  of  the  country." 

The  statistics  of  clearing-houses,  which  are  everywhere 
multiplying,  also  show  a  continued  tendency  for  the  settle- 
ment of  financial  obligations  without  the  intervention  of 
either  notes  or  coin.  In  the  United  States  the  exchanges 
effected  through  the  medium  of  clearing-houses  increased 
$7,604,000,000  in  the  single  year  from  1885  to  1886.  In 
the  United  Kingdom  the  daily  clearances  of  its  banks 
amount  to  nearly  one  fifth  of  the  whole  supply  of  gold  in 
the  country ;  and  for  the  year  1885,  for  the  three  commer- 
cial centers  of  London,  Manchester,  and  Newcastle,  amount- 
ed to  the  almost  incomprehensible  sum  of  £6,048,000,000 
($29,393,280,000).  In  Germany  the  clearing-house  system 
only  came  into  full  action  in  1884,  but  in  1886  the  business 
had  grown  to  12,355,000,000  marks;  and  the  question  in 
this  connection  is  most  pertinent — i.  e.,  "  What  relation  does 
this  saving  of  the  use  of  money  bear  to  the  quantity  of  gold 
Germany  is  estimated  to  have  absorbed  in  her  new  coin- 
age ?  " — SIB  THOMAS  FAEEER. 

Eepeated  investigations  made  in  England  in  recent  years 
prove  that  only  about  '06  per  cent  of  coin  is  used  in  settling 
the  transactions  of  banks  and  bankers  of  that  country ;  and 
the  results  of  an  inquiry  instituted  by  the  United  States 
Controller  of  the  Currency  in  1881  showed  that,  of  all  the 
receipts  by  1,966  national  banks  in  one  day  in  that  year 
(June  30th),  nijQ^tyj-fiyjB_per  cent  were  made  up  of  forms  of 
credit,  exclusive  of  even  circulating  notes ;  while  for  New 
York  city  the  percentage  was  98-7.  At  all  the  banks  the 
proportion  of  gold  coin  to  the  whole  receipts  was  only  -65  of 
one  per  cent.*  A  curious  indirect  illustration  of  the  influ- 

*  In  an  address  before  the  British  Institute  of  Bankers,  November,  1887, 
by  Mr.  J.  W.  Birch,  one  of  the  directors  of  the  Bank  of  England,  he  stated 


MONETARY  CONDITION  OF  FRANCE.  215 

ence  of  the  extension  of  banking  facilities,  and  the  use  of 
checks  in  economizing  coin  as  a  medium  for  effecting  ex- 
changes, is  afforded  by  contrasting  the  monetary  condition  of 
France — a  country  where  the  check  as  a  means  of  payment 
is  comparatively  little  used,  and  other  banking  devices  have 
not  been  extensively  adopted — with  that  of  the  United 
States,  where  all  the  modern  instrumentalities  for  facilitat- 
ing exchanges  have  been  quickly  adopted  and  extensively 
employed.  The  result  is,  according  to  M.  Leroy-Beaulieu, 
that  while  France  has  only  38,000,000  inhabitants,  as  com- 
pared with  65,000,000  in  the  United  States,  it  holds,  and 
seems  to  require,  for  the  transaction  of  its  business  a  much 
larger  stock  of  gold — a  stock  which  bears  the  same  propor- 
tion to  that  held  in  the  United  States  as  five  to  three. 
Taking  the  amount  of  gold  per  capita,  the  disproportion  is 
even  much  greater;  the  amount  of  gold,  according  to  the 
same  authority,  held  in  France  being  131  francs  (about  $25) 
per  capita,  while  in  the  United  States  it  is  not  in  excess  of 
$10  (about  52  francs)  per  capita ;  or,  in  other  words,  the 
amount  of  gold  money  per  capita  in  France  is  two  and  one 
half  times  that  in  the  United  States. 

"  The  transfer  by  means  of  checks  of  the  right  to  the  possession  of 
gold,  has  to  a  vast  extent  taken  the  place  of  the  transfer  of  gold  itself, 
and  it  can  not  be  doubted  that  every  day  the  payments  which  are  made 
by  means  of  checks  greatly  exceed  the  amount  of  gold  which  exists 
available  to  meet  the  checks,  if  every  holder  were  to  insist  upon  receiv- 
ing the  gold  which  he  is  entitled  to  claim.  The  purchasing  power  of 
the  people  consists,  it  appears  to  us,  not  only  of  the  actual  gold  which 
they  possess,  or  of  that  which  their  bankers  are  possessed  of  and  can 

that  he  had  "asked  the  head  of  the  Private  Drawing  Office  of  the  Bank  of 
England  to  take  out  the  figures  of  one  week's  payments  hap-hazard,  and  the 
result  was  that  instruments  of  credit  were  eighty-seven  and  a  quarter  per  cent 
of  the  total,  bank-notes  twelve  and  a  quarter  per  cent,  while  the  cash  pay- 
ments amounted  to  only  about  three  per  mille.  He  had  obtained  similar  sta- 
tistics for  twenty-two  days'  payments  at  Messrs.  Glyn,  Mills  &  Co.,  with  the 
result  that  their  average  of  cash  payments  was  about  four  and  u  half  per 
mille." 


216  RECENT  ECONOMIC  CHANGES. 

immediately  command,,  but,  to  use  a  popular  expression,  of  the  money 
which  they  have  at  their  disposal  at  their  bankers',  which  greatly  ex- 
ceeds the  amount  of  gold  which  either  they  or  their  bankers  could  at 
any  time  at  once  command.  This  is  indeed  an  under-statement  of  the 
case,  for  the  credit  which  customers  can  obtain  from  their  bankers  may 
have  as  potent  an  influence  upon  prices  as  their  cash  balances.  So 
long  as  those  who  possess  commodities  are  as  ready  to  take  checks  for 
them  as  they  would  be  to  take  gold,  the  balance  which  a  man  has  or 
can  have,  at  his  bankers',  influences  prices  to  the  same  extent  as  if  he 
were  possessed  of  that  amount  of  gold." — Final  Report  of  the  British 
Gold  and  Silver  Commission,  Part  II,  p.  70. 

In  every  country  which  has  adopted  the  "  postal  money  " 
system,  the  rapidity  with  which  the  public  resort  to  that 
method  of  effecting  exchanges  is  also  most  surprising. 

The  number  of  "  postal "  orders  issued  by  the  British 
Post-Office  in  1887  was  35,198,754,  representing  £14,228,734 
($69,151,000) ;  while  money-orders,  domestic  and  foreign, 
were  issued  during  the  same  year  to  the  amount  of  £27,320,- 
000  ($132,776,000). 

Domestic  money-orders  were  first  issued  in  the  United 
States  in  1864.  In  the  fiscal  year  1864-'65  the  total  amount 
issued  represented  $1,360,122  ;  but  for  the  fiscal  year  ending 
June  30,  1888,  the  amount  of  such  orders  issued  had  grown 
to  $119,649,064.  The  growth  of  the  international  money- 
order  system  has  been  even  more  marked.  Such  orders  were 
first  anthorized  in  1869,  and  the  total  amount  issued  from 
September  1,  1869,  to  June  30,  1870,  was  only  $22,189. 
From  1872,  however,  the  system  made  rapid  strides,  and  in 
the  fiscal  year  1887-'88  the  total  amount  issued  had  grown 
to  $11,293,870. 

In  estimating  the  influence  of  any  diminished  produc- 
tion of  gold  in  recent  years,  it  is  important  to  bear  in  mind 
a  point  to  which  attention  has  been  often  heretofore  called, 
and  that  is,  that  gold  and  silver  are  not  like  other  commodi- 
ties, of  which  the  greater  part  of  the  annual  production  is 
annually  consumed ;  but  that  their  use  for  the  purpose  of 
effecting  exchanges  does  not  involve  consumption,  except 


GOLD  AND  SILVER  UNLIKE  OTHER  COMMODITIES.  217 

by  loss  and  wear  ;  that  the  work  they  have  once  done  they 
are  equally  ready  to  do  over  and  over  again,  and  that  every 
addition  to  their  stock  is  an  addition  to  the  fund  available 
for  exchanges.  It  follows,  therefore,  that  in  the  case  of  the 
precious  metals,  a  diminution,  or  an  increase  in  the  new 
supply  is  of  less  importance  than  in  the  case  of  consumable 
articles,  and  that  an  increase  or  diminution  of  demand  has  a 
smaller  effect.  Furthermore,  the  aggregate  stock  of  gold  has 
not  diminished,  but  has  continually  increased ;  although  the 
annual  addition  to  the  world's  stock  has  somewhat  di- 
minished of  late  years.  Dr.  Soetbeer  estimates  "the  pro- 
duction of  gold  since  the  end  of  the  fifteenth  century  to  have 
been  £1,553,415,000  ($7,549,596,900).  An  annual  supply  of 
£20,000,000  ($97,000,000)  above  the  present  average  prod- 
uct would  consequently  be  about  one  and  a  quarter  per 
cent  on  that  stock;  while  the  annual  diminution  in  the 
supply  which  has  taken  place  in  the  last  fifteen  years  would 
only  amount  to  one  quarter  per  cent  per  annum."  *  That 
such  a  diminution  of  supply — even  if  a  much  higher  esti- 
mate is  adopted — has  for  each  and  every  year  for  a  consider- 
able period  been  far  more  than  supplemented  and  made 
good  by  the  reduction  in  the  amount  of  capital,  in  the  form 
of  money,  which  the  increased  facilities  for  doing  business 
have  permitted  and  effected,  is  a  proposition  which  it  would 
seem  could  not  well  be  doubted,  f 

* «'  Final  Report  of  the  British  Gold  and  Silver  Commission,"  p.  18. 

t  "  The  trade  of  the  world  is  carried  on  by  credit  and  capital,  and  any 
causes  affecting  these  essentials  have  infinitely  greater  effect  on  prices  than  a 
slight  proportionate  increase  or  decrease  in  the  production  of  gold.  A  mer- 
chant may  not  hold  ten  sovereigns,  but  he  may  have  capital  and  credit  for  ten 
millions.  An  ingenious  statistician  has  calculated  the  capital  of  the  world  in 
1880  at  £46,000,000,000  sterling"  ($230,000,000,000),  "and  if  credit  and 
capital  have  had  the  main  voice  in  the  question  of  prices,  how  minute  must 
have  been  the  effect  on  the  market  of  an  annual  reduction  in  the  production  of 
floating  capital  of  ten  (sterling)  millions  per  annum,  from  a  short  period  of  most 
exceptional  production,  especially  when  the  falling  off  has  been  more  than  bal- 
anced by  the  increased  economy  in  the  use  of  gold !  "—NATHANIEL  CORK, 
"Whatitthe  TrueMeamreof 'the  Alleged  Appreciation  oj 'Gold?"  London,lS8B. 


218  RECENT  ECONOMIC  CHANGES. 

The  evidence,  therefore,  seems  to  fully  warrant  the  fol- 
lowing conclusions  :  That  the  tendency  of  the  age  is  to  use 
continually  less  and  less  of  coin  in  the  transaction  of  busi- 
ness; and  that  "so  far  from  there  being  any  scarcity  of 
gold,  there  never  was  a  period  in  the  world's  commercial 
history  when  the  existing  quantity  was  so  large  as  at  present, 
in  proportion  to  the  necessity  for  its  use  or  the  purposes  it 
has  to  serve." 

The  present  and  rapidly  increasing  indifference  of  the 
business  public,  alike  in  Europe  and  the  United  States, 
whose  interest  in  this  subject  is  mainly  practical,  is  also 
significant,  as  indicating  that  the  importance  formerly  con- 
ceded to  the  gold-scarcity  theory  has  not  been  confirmed  by 
experience. 

In  fact,  the  changes  in  recent  years  in  the  world's 
economic  condition  have  essentially  changed  the  relative 
importance  of  the  two  functions,  which  gold  as  the  leading 
monetary  metal  discharges ;  namely,  that  of  an  instrumen- 
tality for  facilitating  exchanges  and  as  a  measure  of  values. 
As  civilization  has  increased,  and  as  new,  quicker,  and 
cheaper  methods  for  the  interchange  of  thought  and  com- 
modities have  been  invented  and  adopted,  the  function  of 
gold  as  a  medium  of  exchange — the  one  that  necessitates  a 
large  and  continually  augmenting  supply,  and  entails  the 
greatest  wear  and  loss — is  rapidly  diminishing  in  impor- 
tance by  the  supplementation  of  other  and  better  agencies. 
On  the  other  hand,  the  function  of  gold  as  a  measure  or 
verifier  of  values,  by  reason  of  its  exemption  from  value 
fluctuations  to  a  greater  extent  than  any  other  product  of 
labor,  is  becoming  of  greater  and  greater  importance  with 
the  continually  increasing  volume  of  the  world's  production 
and  distribution,  and  more  especially  since  the  other  pre- 
cious metal — silver — has  become  uncertain  and  fluctuating 
in  value.  But,  in  discharging  this  function,  the  service  which 
gold  renders  is  analogous  to  that  rendered  by  all  other 
measures,  the  yard-stick,  the  bushel  measure,  or  the  metal 


TWO  FUNCTIONS  OF  GOLD.  219 

mercury,  which  in  the  tube  of  the  thermometer  or  barometer 
measures  the  temperature  or  pressure  of  the  atmosphere. 
That  is,  a  given  quantity  of  gold  can  be  used  to  an  indefinite 
extent  with  such  a  minimum  of  waste  that  continuous  large 
supplies  are  not  imperative ;  or,  as  Sir  Thomas  Farrer  has 
happily  expressed  it,  "we  are  returning  in  the  advanced 
stage  of  commerce  to  a  state  of  barter,  in  which  money  is 
merely  the  measure  and  language,  not  the  actual  medium,  of 
exchange,  and  in  which  personal  rights  and  duties  take  the 
place  of  cash."  * 

Whether  in  the  case  of  silver,  which  has  been  used  for 
currency  purposes  throughout  the  world  since  1873  to  a 
greater  extent  than  ever  before,  but  which  has  ceased  to 
maintain  its  parity  with  gold  as  a  measure  of  value,  it  is 
possible,  or  desirable,  to  restore  the  latter  quality  through 
legislation,  is  a  subject  foreign  to  the  present  discussion. 
But  it  may  not  be  irrelevant  to  call  attention  at  this  point 
to  the  manner  in  which  certain  admitted  facts  touching  the 
recent  fall  in  prices  have  been  misunderstood,  and,  more 
especially,  have  been  perverted,  with  a  view  of  sustaining 
the  theory  of  the  appreciation  of  gold  and  of  creating  exag- 
gerated ideas  respecting  consequent  impending  disasters, 
and  the  power  of  legislation  to  provide  remedies.  Thus,  in 
illustration  of  the  assumption  that  the  quantity  of  gold  in 
the  world,  available  for  use  as  money,  mainly  regulates 
prices,  and  that,  prices  having  fallen  by  reason  of  a  scarcity 
of  gold,  the  ratio  of  debts  to  assets,  or  the  burdens  upon 

*  "  In  the  original  and  simplest  form  of  barter,  poods  and  services  were  ex- 
changed directly  against  one  another :  a  horse  against  so  many  sheep,  a  day's 
labor  against  a  day's  food,  and  so  on.  In  the  next  stage  the  exchange  was 
effected  by  the  intervention  and  actual  use  of  money,  which  was  then  both  the 
measure  of  value  and  the  actual  medium  by  the  use  of  which  the  exchange  was 
actually  effected.  In  the  third  stage,  to  which  the  most  advanced  nations 
have  now  come,  the  barter  is  effected  not  by  the  use  and  intervention  of 
money,  but  by  the  use  and  intervention  of  personal  promises,  which  are 
made  in  terms  of  money,  and  the  value  of  which  SB  therefore  measured  by 
money." 


220  RECENT  ECONOMIC  CHANGES. 

debtors,  lias  been  increased,  the  following  statements  were 
made  in  a  memorial  signed  by  ninety-five  members  of  the 
United  States  House  of  Kepresentatives  of  the  Forty-eighth 
Congress,  and  presented  to  the  President  of  the  United 
States  in  1885  : 

"  Eighteen  million  bales  of  cotton  were  the  equivalent  in  value  of 
the  entire  interest-bearing  national  debt  in  1865  ($2,221,000,000);  but 
it  will  take  thirty-five  million  bales  at  the  price  of  cotton  now  (1885) 
to  pay  the  remainder  of  such  debt  ($1,196,000,000).  Twenty-five  mill- 
ion tons  of  bar-iron  would  have  paid  the  whole  debt  ($2,674,000,000) 
in  1865 ;  it  will  now  take  thirty-five  million  tons  to  pay  what  remains 
($1,375,000,000)  after  all  that  has  been  paid." 

The  inference,  therefore,  intended  to  be  conveyed  was, 
that  the  burden  of  the  national  debt  of  the  United  States 
in  1885,  notwithstanding  the  large  payments  on  the  same 
during  the  previous  twenty  years,  had  really  been  increased, 
inasmuch  as  a  greater  effort  of  labor,  or  an  increased 
amount  of  the  products  of  labor,  was  now  necessary  to 
liquidate  it,  than  when  the  purchasing  power  of  gold  had 
not  been  appreciated  through  its  scarcity ;  and,  as  with 
public  debts,  so  also  with  private  debts,  especially  such  as 
are  in  the  nature  of  mortgages  on  land,  or  on  other  product- 
ive fixed  capital. 

Now,  in  reply  to  this  it  is  to  be  said,  first,  that  the  basis 
assumed  for  this  comparison  of  prices  was,  in  the  case  of 
cotton,  entirely  unfair  and  unnatural — the  gold  price  of  this 
commodity  in  the  year  1865,  owing  to  a  scarcity  occasioned 
by  war,  having  been  more  than  two  hundred  and  fifty  per 
cent  higher  than  the  average  prices  in  1860  before  the  war ; 
while  the  price  of  iron  for  that  same  year  in  the  American 
markets  was  also  inflated '  on  even  a  gold  basis ;  and,  sec- 
ondly, that  no  consideration  is  given  or  allowance  made  in 
the  above  comparisons  for  the  results  of  labor  at  the  two 
periods  of  1865  and  1885 ;  not  more,  and  probably  much 
less,  actual  labor  in  1865-'86  having  produced  6,550,000 
bales  of  cotton  in  the  United  States  than  was  required  in 


EATIO  OP  DEBTS  AND  ASSETS.  221 

1860  to  produce  3,800,000  bales;*  while  in  the  case  of 
bar-iron  the  proportion  of  days'  labor  to  a  ton  of  prod- 
uct has  been  diminished  more  than  one  half  since  1865; 
and  the  same  is  true,  also,  of  that  more  valuable  product 
of  iron,  namely,  steel.  Furthermore,  no  important  prod- 
uct of  the  United  States  can  be  named  in  which  the 
labor  cost  of  production  has  not  decreased  very  much 
more  than  has  the  gold  price  of  the  same  between  1865 
and  1885.  In  short,  if  the  debtor  has  got  more  to  pay  at 
the  latter  than  at  the  former  period,  it  is  not  the  fault 
of  any  change  in  the  relations  of  the  precious  metals  if  he 
has  not  at  the  same  time  got  correspondingly  more  to  pay 
with. 

The  monetary  experience  of  the  United  States  since 
1879  has  been  so  especially  remarkable,  and  has  such  a  bear- 
ing on  the  economic  problem  of  the  relation  of  money-supply 
to  prices,  as  to  entitle  it  to  extended  notice.  The  following 
table  shows  the  changes  in  the  circulating  media  of  the 
United  States — bullion,  coin,  and  paper — since  January  1, 
1879  (when  the  country  resumed  specie  payments),  and 
January  1,  1889 — a  period  of  ten  years  : 

*  The  increase  in  the  cotton  product  of  the  United  States  since  1860  has 
been  due  mainly  to  increased  use  of  fertilizers,  better  tillage,  and  better  con- 
ditions for  the  employment  of  labor.  In  the  Brazos  alluvial  region  of  Texas, 
which  ranks  among  the  first  of  cotton-producing  regions,  the  relative  increase 
in  cotton  product  and  population  between  1870  and  1880,  according  to  the 
United  States  census,  was  1*8  to  1.  In  what  is  termed  the  "oak-upland" 
regions  of  North  Carolina,  the  product  of  cotton  in  1880  had  increased  over 
that  of  1870  in  the  ratio  of  4*6  to  1,  or  this  region  in  1880  produced  more  cot- 
ton than  the  product  of  the  entire  State  in  either  1870  or  1860.  "  This  re- 
markable result,"  according  to  the  special  United  States  census  report  on 
cotton  for  1880,  "  was  due  mainly  to  the  introduction  and  general  use  of  com- 
mercial fertilizers,  which  not  only  increase  the  crop,  but  hasten  its  maturity 
from  two  to  three  weeks,  and  so  bring  into  the  cotton  belt  a  strip  of  plateau 
country,  whose  elevation  of  from  800  to  1,200  feet  had  placed  it  just  beyond 
the  climatic  range  of  the  cotton-plant.  This  change  is  in  no  respect  due  to 
altered  relations  of  labor."  In  truth,  there  was  no  one  thing  in  which  tho 
American  advocates  of  slavery  were  more  mistaken  than  in  the  assumption 
that  slave  labor  was  cheap  labor. 


222 


RECENT  ECONOMIC  CHANGES. 


CIRCULATION. 

Jan.  1,  1879. 

Jan.  1,  1889. 

Total. 

Gold  coin  and  bullion.  .  . 
Silver  dollars  

$278,310,126 
22,495,550 

$704,608,169 
315,186,190 

Inc.  $426,298,043 
"      292,690,640 

Silver  bullion  

9,121,417 

10,865,237 

"          1,743,820 

Fractional  silver  

71,021,162 

76,889,983 

"          5,863,821 

National-bank  notes.  .  .  . 
Legal-tender  notes  

323,791.674 
346,681,016 

233,660,027 
346,681,016 

Dec.     90,131,647 

Total  currency  issues.  .  . 

1,051,420,945 

1,687,890,622 

Inc.    636,469,677 

Of  this  large  increase  of  $636,469,677,  $578,637,368,  in 
coin  and  paper,  were  in  the  hands  of  the  people ;  and 
$57,832,309,  in  bullion,  coin,  and  paper,  in  the  national 
Treasury.* 

It  thus  appears  that,  while  there  has  been  an  increase  in 
the  population  of  the  United  States  during  the  period  of 
ten  years  under  consideration  of  about  thirty  per  cent,  the 
increase  in  the  precious  metals  and  paper  available  for  cir- 
culation during  the  same  time  was  6O05  per  cent ;  while  of 
coin  and  paper  in  active  use  among  the  people  and  banks 
the  increase  was  69'6  per  cent,  or  much  more  than  double 
the  rate  of  increase  in  population.  Now,  as  during  this 
same  period  there  was  a  great  and  universal  decline  in  the 
prices  of  commodities  in  the  United  States  (as  elsewhere), 
the  interesting  question  arises,  How  do  these  experiences 
harmonize  with  the  theory  that  the  volume  of  circulating 
medium  controls  prices,  and  that  the  movement  of  the 
precious  metals  puts  down  prices  in  the  event  of  a  reduction 
of  the  supply,  and  puts  them  up  in  the  event  of  an  increase 
of  supply  ?  Note,  further,  that  the  increase  of  gold  and  sil- 
ver coin  and  bullion  in  the  United  States  during  the  ten 
years,  from  1879  to  1889,  was  $726,600,000,  while  the  paper 
circulation  diminished.  Nor  can  it  be  maintained  that  the 
fall  in  the  value  of  silver  bullion  has  affected  this  circula- 
tion, since,  for  all  purposes  of  internal  circulation,  silver  and 
its  paper  representatives  have  had  the  same  efficiency  and 


*  New  York  "Financial  Chronicle,"  February  9, 1889. 


MONETARY  EXPERIENCE  OF  THE  UNITED  STATES.   223 

exchangeable  value  as  existed  before  the  depreciation  of  sil- 
ver bullion.  The  availability  of  silver  coin  for  the  settle- 
ment on  the  part  of  the  United  States  of  international  bal- 
ances has  been  alone  affected ;  and  this,  so  long  as  there  has 
been  an  adequate  supply  of  gold,  is  an  immaterial  factor. 
It  would,  therefore,  seem  that  the  above  exhibit  furnishes 
the  most  complete  refutation  of  the  theory  that  changes  in 
the  supplies  of  the  precious  metals  account  for  the  fall  in 
the  prices  of  commodities.* 

*  It  will  add  to  the  understanding  of  this  important  economic  experience 
to  note  the  arguments  brought  forward  in  the  United  States  in  disproof  of  the 
above  conclusion  —  the  facts,  as  stated,  being  indisputable.  It  has  been 
claimed,  in  the  first  instance,  that  as  the  United  States  has  a  vast  quantity  of 
products  to  sell — the  prices  of  which  are  regulated  by  the  prices  which  the 
surplus  of  such  products  will  command  in  foreign  markets — the  home  prices 
of  the  same  can  not  escape  conformity  to  the  universal  cost ;  or,  in  other 
words,  that  the  influence  of  the  local  inflation  of  currency  that  has  taken  place 
in  the  United  States  has  been  thus  neutralized.  But  the  market  value  of  all 
the  products  of  the  United  States  are  not  regulated  by  foreign  demand ;  and, 
of  such  exceptions,  not  one  can  be  cited  that  has  unmistakably  increased  in 
price  during  recent  years  by  reason  of  any  increase  in  the  volume  of  the  cir- 
culating media.  It  has  also  been  maintained  that  the  increasing  importations 
of  the  United  States  since  1879  constitute  evidence  of  the  fact  and  influence 
of  inflation — i.  e.,  by  increasing  the  buying  power  of  her  people.  But  a  more 
rational  explanation  would  seem  to  be  found  in  a  corresponding  increase  of 
exports,  or  an  improvement  in  national  credit,  or  both  conjoined ;  the  occur- 
rence of  which  would  seem  to  be  demonstrated  by  the  fact  that  the  country 
from  1879  to  1889  has  not  been  under  the  necessity  of  exporting  its  precious 
metals  in  payment  of  its  imports,  and  not  only  retained  but  increased  its  stock 
of  them.  Had  the  expansion  of  currency  in  the  United  States  since  1879  occa- 
sioned any  upward  tendency  of  prices,  then  exports  would  have  been  to  a  like 
extent  checked,  and  the  nation's  ability  to  import  correspondingly  restricted. 
For  it  is  the  ability  of  a  country  to  export  that  determines  its  ability  to  im- 
port, and  not  the  vice  versa  proposition.  Furthermore,  there  has  been  during 
the  period  of  inflation  in  the  United  States  no  unusual  speculation.  On  the 
New  York  Stock  Exchange  the  number  of  shares  sold  has  been  annually  de- 
creasing since  1882,  and  for  the  year  1888  the  aggregate  sales  were  less  than 
for  any  time  during  the  previous  ten  years. 


VI. 

Changes  in  recent  years  in  the  relative  values  of  the  precious  metals — Subject 
not  generally  understood — Former  stability  in  the  price  of  silver — Action 
of  the  German  Government  in  1873 — Concurrent  decline  in  the  price  of 
silver — Action  of  the  "Latin  Union" — Influence  and  nature  of  India 
"Council  bilk" — Alleged  demonetization  of  silver — Increased  purchasing 
power  of  silver — Increased  product  of  silver — Economic  disturbances  con- 
sequent on  the  decline  of  silver — Increased  production  of  cotton  fabrics 
in  India — Industrial  awakening  in  India — Eelation  of  the  decline  in  the 
value  of  silver  to  the  supply  of  India  wheat — International  trade,  a  trade 
in  commodities  and  not  in  money — Economic  disturbances  in  the  Dutch 
East  Indies — Natural  law  governing  the  selection  and  use  of  metallic  money 
— Experience  of  Corea — The  metal  coinage  system  of  the  world  trimetallic 
— The  gold  standard  a  necessity  of  advanced  civilization — The  fall  of 
prices  due  to  more  potent  agencies  than  variations  in  the  volumes  or 
relative  values  of  the  precious  metals. 

NOTWITHSTANDING  the  great  attention  that  has  been 
given  to  the  subject  of  the  change  in  recent  years  in  the 
relative  values  of  the  precious  metals,  and  the  disturbing 
influences  resulting  therefrom — with  its  almost  interminable 
resulting  publications  and  public  and  private  discussions — 
there  is  probably  no  other  one  economic  or  fiscal  problem 
concerning  which  there  is  so  little  comprehension  on  the  part 
of  the  general  public,  or  so  little  agreement  as  to  causes  and 
results  among  those  who  have  made  it  a  matter  of  special 
investigation.*  It  is  of  the  first  importance,  therefore,  for 

*  "  From  the  commencement  of  our  inquiry  we  have  been  profoundly  im- 
pressed with  the  extreme  complexity  of  the  questions  submitted  for  our  con- 
sideration."— Final  Report  of  the  British  Gold  and  Silver  Commission. 

"  It  has  been  my  experience,  that  about  nine  men  out  often,  even  of  those 
who  might  be  expected  to  have  some  definite  views  upon  the  subject,  when 
asked  their  opinion  upon  the  expediency  or  necessity  of  adopting  a  bimetallic 


MONETARY  SYSTEM  OF  GERMANY.      225 

the  understanding  of  the  past  involved  economic  disturb- 
ances, that  a  clear  and  succinct  statement  of  what  has  hap- 
pened should  be  presented ;  and  such  a  statement  it  is  now 
proposed  to  attempt. 

For  many  years  prior  to  1873  the  bullion  price  of  silver 
remained  very  nearly  constant  at  from  60  to  61  pence  per 
ounce  on  the  London  market,  while  the  market  ratio  of  gold 
to  silver,  or  the  ratio  according  to  which  gold  and  silver 
could  be  interchanged,  was  limited  in  London,  from  1851  to 
1872  inclusive,  to  a  range  of  variation  of  from  1  to  15-10 
(the  minimum)  in  1865  to  1  to  15-79  (the  maximum)  in 
1872.* 

In  1873  the  new  German  Empire — recognizing  the  im- 
portance of  having  a  monetary  system  better  suited  to  her 
advanced  industrial  and  commercial  ^situation  than  that 
which  she  then  possessed,  and  also  the  desirability  of  having 
a  uniform  coinage  throughout  the  numerous  small  states 
that  had  come  to  be  included  under  the  Imperial  Govern- 
ment— took  advantage  of  the  command  of  a  large  stock  of 


monetary  system,  will  reply,  '  Oh,  that  is  a  very  important  question,  but  I  do 
not  pretend  to  understand  it.' " — EDWABD  ATKINSON,  British  Association 
Proceedings,  1887. 

"  There  never  has  in  this  country  been  any  but  a  very  languid  interest  in 
the  question  of  bimetallism,  and  even  that  slight  interest  will  not  endure  if 
trade  goes  on  improving.  The  subject  is  one  which  the  general  public  do  not 
understand.  Thanks  to  the  untiring  energy  of  the  advocates  of  a  double 
standard,  a  certain  number  of  people  have  become  vaguely  impressed  with  the 
idea  that  somehow  or  other  dull  trade  and  low  prices  have  been  caused  by  a 
scarcity  of  money,  and  that,  in  some  way  or  other,  if  our  mint  were  opened  to 
the  unrestricted  coinage  of  silver,  some  of  it  would  find  its  way  into  their 
pockets.  This  impression,  however,  would  very  quickly  wear  off  if  trade  be- 
came really  active ;  and  as  there  is  now  the  prospect  of  a  genuine  trade  revival, 
we  are  inclined  to  believe  that  here,  at  all  es*ents,  bimetallism  will  soon  die  a 
natural  death.  In  any  case,  it  is  evident  that  there  is  no  such  strong  propel- 
ling force  behind  the  agitation  as  will  induce  our  Government  to  take  any 
action  in  the  matter  in  face  of  the  conflicting  report  of  the  Gold  and  Silver 
Commission.  And  when  it  is  certain  that  nothing  will  be  done,  it  is  not  worth 
while  to  prolong  discussion." — London  Economist,  November  17, 1888. 

*  Pixley  and  AbelPs  "  Tables,"  London. 


226  RECENT  ECONOMIC  CHANGES. 

gold,  that  had  accrued  through  the  payment  by  France  of 
an  enormous  war  indemnity,*  to  effect  reform.  An  exceed- 
ingly miscellaneous  system  of  coinage  and  currency — con- 
sisting of  seventeen  varieties  of  gold  money;  sixty-six 
different  coins  of  silver,  possessing  full  legal-tender  powers 
and  constituting  (in  1870)  65'7  per  cent  of  the  entire  circu- 
lation ;  forty-six  kinds  of  notes  issued  by  thirty-five  different 
banks,  besides  state  paper  money  of  various  kinds  to  the 
extent  of  7*5  per  cent  of  the  circulation — was  accordingly 
called  in,  and  replaced  by  a  new  system  of  gold  and  silver 
coinage  and  paper  currency.  In  this  new  system,  gold  was 
established  as  the  sole  monetary  standard  of  the  empire, 
unlimited  of  necessity  in  respect  to  legal-tender  powers, 
while  to  silver  was  assigned  the  function  of  subsidiary  serv- 
ice; and  for  the  latter  purpose  an  issue  of  silver  coinage 
was  provided,  not  to  exceed  in  the  aggregate  10  marks 
($2.50)  for  each  inhabitant  of  the  empire  (a  comparatively 
low  figure),  with  its  legal-tender  value  limited  to  20  marks 
($5).  An  issue  of  new  paper  currency  was  also  authorized, 
with  a  prohibition  of  the  use  of  notes  of  a  less  denomination 
than  100  marks  ($25),  to  be  distributed  according  to  popu- 
lation among  the  various  states,  and  redeemable  in  the  new 
imperial  coinage.  A  proportion  of  the  old  silver  coinage, 
which,  having  been  supplanted  by  gold,  was  not  needed  for 
recoinage  under  the  new  system,  was  offered  for  sale  in  the 
open  market  as  bullion,  and  the  amount  actually  sold  be- 
tween 1873  and  the  end  of  May,  1879,  when  the  sales  were 
suspended,  realized  $141,784,948.  Of  this  aggregate,  $45,- 
644,311  was  sold  between  the  years  1873  and  1876,  and  $96,- 
140,627  between  1877  and  1879  inclusive. 

Concurrently  with  this  action  of  Germany  the  bullion 
price  of  silver  began  to  decline,  and  this  decline  was  un- 

*  The  amount  in  gold  which  France  paid  to  Germany  directly  was  $54,- 
600,000 ;  but  in  addition  there  were  French  bills  of  exchange  which  gave 
Germany  a  title  to  gold  in  places  like  London,  on  which  such  bills  were 
negotiated. 


DECLINE  IN  THE  PRICE  OF  SILVER.  227 

doubtedly  further  promoted  by  the  subsequent  action  of  the 
so-called  "  Latin  Union  "  —  comprising  the  five  countries  of 
Europe  using  the  franc  system,  namely,  France,  Belgium, 
Italy,  Switzerland,  and  Greece  —  which,  fearing  lest  the  silver 
liberated  from  use  in  Germany,  and  offered  for  sale,  would 
flow  in  upon  and  flood  their  respective  mints,  to  the  entire 
exclusion  of  gold  if  the  free  coinage  of  silver  was  continued  ; 
first  restricted  (in  1874),  and  finally  (in  1877-'78),  owing  to 
the  continued  decline  in  the  value  of  silver,  entirely  sus- 
pended the  coinage  of  silver  five-franc-pieces.  The  coinage 
of  subsidiary  silver,  or  silver  of  smaller  denominations  than 
five  francs,  was,  however,  permitted  and  continued. 

In  1873,  also,  the  Congress  of  the  United  States,  in  re- 
vising its  coinage  system,  dropped  from  the  list  of  silver 
coins  authorized  to  be  thereafter  issued  from  its  Mint,  the 
silver  dollar  of  412£  grains,  although  providing  for  the  un- 
limited issue  and  coinage  of  silver  in  pieces  of  smaller  de- 
nominations than  the  dollar;  and  mainly  for  the  reason 
that  this  particular  silver  coin  was  not  then  in  circulation  in 
the  country,  and  indeed  had  not  been  for  a  period  of  more 
than  twenty-five  years.* 

The  extent  of  the  decline  in  the  price  of  bar-silver  per 
standard  ounce,  in  pence,  upon  the  London  market,  since 
1873,  is  shown  by  the  following  exhibit  of  annual  average 
quotations  : 

1873,  59id  1883, 

1874,  5S^gd.  1885, 

1875,  5Qld.  1886, 

1876,  52H  1887,  44K 
1879,  51  id.  1888,  42£d. 

In  May,  1888,  the  price  of  silver  temporarily  fell  to 
f.  per  ounce  —  the  lowest  price  ever  known  in  history. 


*  The  statement  often  made,  and  to  a  large  extent  credited,  that  the  silver 
dollar  was  dropped  in  1873  from  the  coinage  system  of  the  United  States  by 
"stealth,  and  for  a  secret  and  dishonest  purpose,"  has  not  the  slightest 
foundation  in  fact,  and  is  simply  an  oft-exploded  falsehood. 


228  RECENT  ECONOMIC  CHANGES. 

During  the  early  years  of  the  decline  of  silver  the  opin- 
ion was  extensively  entertained  that  it  was  primarily  and 
mainly  occasioned  by  the  new  supply  to  the  world's  market 
consequent  upon  the  sales  of  silver  by  Germany,*  and  this 
opinion  found  so  much  of  favor  with  leading  German  bank- 
ers that  it  is  understood  that  Germany  suspended  her  sales 
of  silver  in  1879  in  accordance  with  their  advice,  and  with 
the  expectation  that  a  partial  or  entire  recovery  of  price 
would  thereby  ensue.  But  no  such  result,  as  is  well  known, 
followed  the  suspension  of  sales  thus  recommended.  How 
little,  moreover,  there  was  of  foundation  for  this  opinion, 
will  appear  from  the  following  circumstances  : 

The  aggregate  silver  product  of  the  world  during  the 
years  (1873-'79),  when  Germany  was  selling  her  discarded 
coinage,  was  about  $650,000,000,  or  more  than  four  and  a 
half  times  the  amount  of  the  sales  ($141,781,000)  which 
Germany  actually  effected.  Again,  during  the  same  period 
of  years  when  Germany  was  increasing  the  world's  supply 
of  silver,  through  her  sales,  to  the  extent  of  $141,781,000, 
the  United  States  drew  upon  and  reduced  this  same  supply 
by  increasing  her  dollar  and  subsidiary  coinage  to  the 
amount  of  $111,307,187.  f  Surely  the  world's  status  of  sil- 

*  The  amount  of  silver  (old  coin)  which  Germany  up  to  1880  was  able  to 
sell,  as  the  result  of  her  policy  of  displacing  silver  by  gold,  has  been  estimated 
at  $270,000,000.  The  amount  which  she  actually  did  sell  between  1873  and 
May,  1879  (when  the  sales  were  suspended),  is  believed  to  have  been  about 
$141,781,000  (£28,000,000).  Since  then  it  is  understood  that  only  a  few  addi- 
tional millions  have  been  marketed — i.  e.,  to  Egypt.  In  addition,  Denmark, 
Sweden,  and  Norway,  which  followed  the  lead  of  Germany,  and  changed 
their  silver  circulation  to  gold,  have  since  thrown  upon  the  market  about 
$9,000.000  of  silver.  (See  LAUGHLIN'S  History  of  Bimetallism  in  the  United 
States,  pp.  141-146.) 

t  During  the  twenty  years  from  1853  to  1873,  the  aggregate  silver  coinage 
of  the  United  States  was  $57,137,000,  or  an  average  of  only  $2,856,000  per  an- 
num, and  of  this  aggregate  but  $5,538,948  was  in  the  form  of  silver  dollars. 
From  1874  to  1879,  inclusive,  the  silver  coinage  of  the  United  States  was 
85,859,360  trade-dollars,  35,801,000  standard  dollars,  22,899,785  halves,  and 
16,747,042  quarters  and  twenty-cent  pieces ;  total,  $111,307,187,  or  an  average 
of  $18,560,000  per  annum. 


INDIA  COUNCIL  BILLS.  229 

ver  during  these  years  must  have  been  one  of  extraordinarily 
unstable  equilibrium  from  antecedent  causes,  threatening 
serious  fluctuations  in  price  even  in  the  absence  of  anything 
abnormal,  if  the  addition  of  so  small  a  net  product  during 
six  years  as  $30,473,000  to  the  current  market  supply  of  sil- 
ver could  depress  the  bullion  price  of  the  world's  mass  of 
this  metal  from  59f  to  48£  pence  per  ounce,  or  over  thirteen 
per  cent. 

That  the  term  "  unstable  equilibrium  "  is  truly  express- 
ive of  the  real  status  of  silver  in  1873  would  further  appear 
from  the  following  evidence  :  There  was  a  well-recognized 
movement  in  France  against  silver  and  in  favor  of  gold 
from  1853  to  1865.  and  its  influence  would  probably  have 
shown  itself  in  a  fall  in  value  of  silver,  had  it  not  been 
for  the  cotton  famine  consequent  on  the  American  war, 
which  occasioned  extraordinary  shipments  of  silver  to  India, 
and  so  counteracted  any  tendency  then  existing  to  a  surplus 
in  the  European  markets.  In  1867  an  International  Mone- 
tary Conference  at  Paris  voted  almost  unanimously  in  favor 
of  the  adoption  of  a  single  gold  standard  by  the  chief  com- 
mercial nations.  As  far  back  as  1860,  the  late  Prof. 
Cairnes,  who  is  recognized  as  a  far-seeing  economist,  vent- 
ured the  prediction  that  silver  was  in  the  process  of  depre- 
ciation. Another  influence  tending  to  powerfully  affect  the 
status  of  silver  in  1873  was  due  to  the  circumstance  that, 
subsequent  to  1868-'69,  the  India  Council  greatly  increased 
the  sale  of  their  bills  (i.  e.,  drawn  on  India  and  payable  in 
silver)  on  the  London  market,  and  so  virtually  increased 
the  stock  of  marketable  silver  at  that  point  to  the  extent  of 
from  $20,000,000  to  $30,000,000  annually,  in  excess  of  what 
it  had  been  for  the  years  immediately  previous.* 

*  The  Government  of  India  is  under  obligation  to  pay  annually  in  England 
certain  fixed  charges  in  gold,  the  same  being  in  the  nature  of  reimbursements 
— principal  or  interest — to  England  for  loans  on  account  of  public  works  in 
India,  receipts  from  railroads  belonging  to  the  British  Government,  pensions 
chargeable  to  India,  etc.  India  being  exclusively  a  silver-usinj  country,  pays 
11 


230  RECENT  ECONOMIC  CHANGES. 

The  German  "  sales  "  theory  being  thus  untenable,  an- 
other hypothesis  has  found  wide  acceptation — namely,  that, 
notwithstanding  any  absolute  or  comparative  increase  in  the 
supply  of  silver  during  recent  years,  its  decline  in  price  and 
the  economic  disturbances  which  are  alleged  to  have  fol- 
lowed, would  not  have  occurred,  had  it  not  been  for  the 
"  demonetization  "  or  the  general  discrediting  of  this  metal 
for  use  as  money ;  which  has  been  contingent  on  the  adop- 
tion of  gold  as  the  sole  monetary  standard  and  as  a  larger 
instrumentality  of  exchange  by  several  of  the  most  impor- 
tant commercial  countries — notably  Germany  and  the  United 
States ;  or,  as  a  leading  American  statesman  has  expressed 
it,  "  but  for  the  striking  down  of  one  half  of  the  world's 
coinage,"  and  "  compelling  gold  to  do  the  work  of  both  gold 
and  silver."  But  here,  also,  the  evidence  in  confirmation  of 
this  hypothesis  is  exceedingly  unsatisfactory  or  wholly  lack- 
ing. If  by  demonetization  is  meant  that  there  has  been  less 
of  silver  in  use  and  circulation  as  money,  absolutely  or  com- 
paratively, throughout  the  world  since  1873  than  formerly ; 
or  that  the  people  of  any  country  have  been  inhibited  to 
their  disadvantage  in  its  use ;  or  that,  in  consequence  of  any 
restrictions  on  its  use  for  coinage,  production  and  trade 
have  decreased,  and  the  prices  of  commodities  and  wages 
have  fallen — the  assumptions  are  not  warranted,  and  the 
term  demonetization  is  meaningless.  The  world's  average 
annual  production  of  silver  since  1873  has  been  greater  than 
ever  before.  Between  1883  and  1887,  inclusive,  the  aggre- 
gate product — measured  in  dollars  of  412|-  grains  each — has 
been  in  excess  of  $600,000,000,  and  most  of  it  has  passed 

its  taxes  and  railroad  freights  and  fares,  etc.,  exclusively  in  silver;  and  in 
liquidation  of  its  foreign  monetary  obligations,  silver  is  remitted  to  London  in 
the  form  of  bills  (exchange)  payable  in  the  silver  currency  of  India,  namely, 
rupees,  •which  are  drawn  by  the  India  Council,  or  the  Government  of  India 
residing  in  London.  It  must  be  obvious  that  to  just  the  amount  of  such 
council  bills  or  drafts  as  are  sold  in  London,  to  just  that  same  extent  the 
exportation  of  silver  for  business  purposes  is  supplemented  or  made  unneces- 
sary. 


INCREASING   USE  OF  SILVER.  231 

into  circulation  as  coin,  or  lies  piled  up  in  national  deposi- 
tories awaiting  any  popular  demand  for  its  employment ;  * 
and  the  greater  number  of  the  daily  transactions  of  trade 
continue  to  be  settled  by  the  use  of  silver,  just  as  formerly. 
"  If  you  take,"  says  Mr.  Kobert  Giffen,  in  his  testimony  be- 
fore the  British  Gold  and  Silver  Commission,  1886,  "  the 
fifteen  years  from  1870,  and  compare  them  with  the  fifteen 
years  before,  you  will  find  that  the  practical  diminution  for 
the  demand  for  silver  in  France,  and  I  suppose  it  has  been 
the  same  in  other  Latin  countries,  has  not  been  sensible  at 
all."  The  continually  increasing  importation  of  silver  into 
India,  China,  Burmah,  and  Japan  is  conclusive  also  as  to 
the  absence  of  any  restrictions  on  the  use  of  this  metal  for 
coinage  purposes  in  these  countries.!  In  short,  all  that  is 
now  claimed  by  one  of  the  most  distinguished  economists 
who  inclines  to  the  view  that  the  monetary  use  of  silver  has 
been  artificially  restricted,  is  that  its  employment  for  coin- 
age might  possibly  have  been  greater  if  it  had  not  been  for 
the  action  of  the  Latin  Convention  countries.  J  But  it  is 

*  The  number  of  standard  silver  dollars  in  the  United  States  in  1879,  the 
year  of  the  redemption  of  specie  payments  by  the  Federal  Government,  was 
reported  at  35,801,000.  The  number  coined  between  1878  and  1888,  inclusive, 
was  299,424,790,  and  of  these  249,979,440  were  in  the  national  Treasury  on 
November  1, 1888.  Of  this  number,  however,  229,783,152  were  held  for  the 
redemption  of  a  like  amount  of  silver  certificates,  which  circulate  as  currency. 
The  Mint  estimate  of  the  total  amount  of  silver  coin  in  the  United  States,  June 
1,  1888  (dollars  and  subsidiary  coin),  was  $376,115,166.  Of  a  coinage  of 
84,484,673  standard  silver  dollars  during  the  year  1888,  34,445,517  rested  at 
the  end  of  the  year  in  the  vaults  of  the  Treasury,  and  only  39,156  passed  into 
the  hands  of  the  people. 

t  During  the  fifteen  years  from  1855  to  1870  the  annual  demand  of  India 
for  silver  was  very  nearly  £10,000,000.  This  period  embraced  the  cotton 
famine.  From  1872  to  1875,  just  before  the  drop  in  silver,  the  amount  that 
India  annually  received  was  £3,000,000.  From  1875  to  1880  it  was  £7,000,- 
000  ;  from  1880-'85,  £6,000,000;  and  for  1885,  £7,108,000. 

J  "  The  suspension  of  the  free  coinage  of  silver  by  the  Latin  Union  oper- 
ated not  to  diminish  the  actual  employment  for  silver  as  compared  with  what 
had  been  in  existence  before  1872,  but  a  possible  employment  which  might 
have  come  into  existence  if  the  law  had  not  changed."  (See  testimony  of  Mr. 
ROBERT  GCTFEX,  Jlritish  Gold  and  Silver  Commission,  Firnt  Report,  p.  28. ) 


232  RECENT  ECONOMIC  CHANGES. 

obvious  that  this  opinion  must  be  necessarily  a  matter  of 
conjecture. 

Again,  the  world  has  never  made  so  great  progress  in 
respect  to  all  things  material  in  any  equal  number  of  years 
as  it  has  during  those  which  have  elapsed  since  silver  began 
to  decline  in  price  in  1873.  Never  before  in  any  corre- 
sponding period  of  time  has  labor  been  so  productive ;  never 
has  the  volume  of  trade  and  commerce  been  greater ;  never 
has  wealth  more  rapidly  accumulated ;  never  has  there  been 
so  much  abundance  for  distribution  on  so  favorable  terms 
to  the  masses ;  never,  finally,  would  an  ounce  of  silver  ex- 
change for  so  much  of  sugar,  wheat,  wool,  iron,  copper,  coal, 
or  of  most  other  commodities,  as  at  present.  If  the  fall  in 
the  price  of  all  desirable  commodities  has  been  an  evil,  as 
not  a  few  seem  to  believe,  it  can  not  be  conclusively  proved, 
in  respect  to  even  one  article,  that  any  such  fall  has  been 
extensively  due  to  any  decline  in  the  value  of  silver  or  any 
appreciation  of  gold. 

On  the  other  hand,  a  more  rational  explanation  of  the 
decline  since  1873  in  the  value  of  silver,  and  one  which  the 
logic  of  subsequent  events  is  substantiating,  would  appear 
to  be  as  follows  :  Since  1860  *  the  annual  product  of  silver 
has  been  rapidly  increasing — i.  e.,  from  $40,800,000  in  1860 
to  $51,900,000  in  1865 ;  $60,000,000  in  1871 ;  $69,000,000 
in  1875;  $95,000,000  in  1880;  $122,000,000  in  1885;  and 
$135,449,000  f  in  1887.  The  continued  increase  in  the  pro- 
duction of  silver  in  the  United  States  since  1861  is  very 
noteworthy.  "  The  total  production  of  that  year  was  $2,000,- 
000,  or  1,546,910  fine  ounces.  In  1873  it  had  reached 
$35,750,000,  or  27,651,017  fine  ounces.  Since  that  date  the 
value  of  bullion  has  been  steadily  declining  (i.  e.,  from  an 
average  of  60^-  in  1872  to  42|  in  1888),  but  that  has  in  no 

*  The  average  annual  production  of  silver,  according  to  M.  Soetbeer,  was 
$22,474,000  from  1811-'20 ;  $18,140,000,  1820-'31 ;  $24,788,000,  1831-'40 ; 
and  $35,118,000,  1841-' 50. 

t  Report  of  Director  of  the  United  States  Mint,  1888. 


COINAGE  POLICY  OF  GERMANY.  233 

measure  checked  the  expansion  in  production.  Each  suc- 
ceeding twelve  months  has  registered  further  growth,  until 
in  1888  the  total  reached  over  $59,000,000,  or  45,783,632 
fine  ounces.  Here,  then,  is  an  increase  of  production  of 
over  sixty-five  per  cent  in  the  face  of  a  decline  in  price  of 
nearly  twenty-nine  per  cent.* 

Previous  to  1871-'72  neither  France  nor  the  Latin  Con- 
vention states  of  Europe  had  been  large  consumers  of  silver. 
In  fact,  from  about  1850  to  1864,  France,  instead  of  being 
a  consumer,  was  really  a  seller  of  silver,  and  during  that 
period  disposed  of  about  £75,000,000  ($375,000,000).  After 
1864  the  tide  turned,  and  France  began  to  take  back  silver, 
but  up  to  1873-'74  her  imports  had  by  no  means  balanced 
her  previous  exports.  M.  Victor  Bonnet,  writing  in  1873 
("  Revue  des  Deux  Mondes  "),  after  the  greater  part  of  the 
French  indemnity  had  been  paid,  estimated  the  quantity  of 
specie  remaining  in  the  possession  of  the  French  people  at 
6,000,000,000  francs  ($1,200,000,000).  China,  also,  which 
previous  to  1864  had  been  a  silver-importing  country,  after 
1864,  and  until  up  to  about  the  time  of  the  drop  in  silver, 
became  a  silver-exporting  country.f'  From  1853  to  1873, 
inclusive,  the  United  States  furthermore  coined  but  very 
little  silver,  and  during  this  whole  period  drew  on  the  world's 
supply  of  silver  for  coinage  purposes  to  an  extent  (measured 
in  dollars)  of  only  $57,137,000;  while,  during  her  long 
period  of  suspension  of  specie  payments,  subsequent  to  1861, 
her  stock  of  silver  coin  entirely  disappeared  from  circula- 
tion, and  in  great  part  was  doubtless  added  to  the  supply  of 
other  countries. 

Under  such  circumstances,  which  were  perfectly  well 
known  to  the  custodians  and  dealers  in  silver  everywhere, 
Germany  entered  the  world's  market  as  a  seller  of  silver. 
The  amount  offered  at  first  was  absolutely  very  small  and 

*  "  New  York  Financial  Chronicle,"  March  2, 1889. 
t  Testimony  of  Mr.  Robert  Giflen,  "  First  Report  of  tho  British  Gold  and 
Silver  Commission,"  p.  29. 


234:  RECENT  ECONOMIC  CHANGES. 

comparatively  insignificant,  but  it  nevertheless  probably 
constituted  a  supply  in  excess  of  any  current  demand.  As 
the  states  of  Europe  and  the  United  States  could  not  at 
once  increase  their  consumption  and  import  of  the  products 
of  Asia,  Africa,  and  South  America,  and  so  increase  their 
sales  (exports)  of  silver,  and,  as  the  price  which  the  surplus 
of  any  commodity  forced  for  sale  will  command  determines 
the  price  of  the  whole  stock  of  such  commodity,  the  price 
of  the  whole  stock  of  silver  bullion  naturally  began  to  de- 
cline. The  general  policy  of  Germany  respecting  the  use 
of  silver  for  coinage,  which  was  subsequently  favored  and 
adopted  by  Sweden,  Norway,  Denmark,  and  Holland,  with 
the  concurrent  suspension  by  the  states  of  the  Latin  Union  of 
the  free  coinage  of  the  silver  five-franc  pieces,  also  unques- 
tionably favored  and  intensified  the  decline  in  the  price  of 
silver  thus  inaugurated,  by  creating  an  apprehension  (or  scare) 
among  the  bullion-dealers  as  to  what  might  further  happen. 
The  continued  decline  in  the  value  of  silver  in  more 
recent  years  may  also  be  rationally  referred  to  a  continuance 
of  the  same  influences.  The  world's  annual  product  of  sil- 
ver has  continued  to  increase,  from  $95,000,000  in  1880  to 
$135,000,000  in  1887,  or  to  an  aggregate  of  over  $900,000,- 
000  for  the  included  period.  No  one  knows  what  is  to  be 
the  product  of  silver  in  the  future ;  but  it  is  reasonable  to 
believe  that,  if  the  price  of  silver  were  to  advance  materially, 
its  product  would  be  largely  augmented.  Recent  reports 
made  under  the  auspices  of  the  Mexican  Secretary  of  the 
Interior,  and  published  in  the  "  Mexican  Economist "  (1886), 
claim  that  the  cost  of  working  the  argentiferous  lead-ores 
of  Mexico,  which  "  exist  in  prodigious  abundance,"  has  been 
greatly  reduced  within  recent  years,  and  that  under  a  better 
system  of  taxation  and  with  an  adequate  supply  of  capital 
the  annual  product  of  the  silver-mines  of  Mexico  could  be 
quickly  doubled  and  even  trebled.*  Furthermore,  an  aver- 

*  The  silver  production  of  Mexico,  as  a  matter  of  fact,  is  rapidly  increas- 


ECONOMY  IN  THE  USE  OF  COIN.  235 

age  decrease  of  at  least  thirty  per  cent  in  the  prices  of  the 
commodities  that  represent  the  great  bulk  of  the  world's 
production  and  consumption  (comparing  the  data  of  1885- 
'86  with  those  of  1867-'77)  has  in  itself  been  equivalent  to 
largely  or  entirely  supplementing  any  increased  demand  for 
the  use  of  silver  and  gold  as  money,  consequent  upon  any 
increase  in  the  volume  of  the  world's  business  during  the 
same  period.  The  constantly  increasing  tendency  of  the 
age  to  use  less  and  less  coin  in  the  transaction  of  busi- 
ness, and  the  continued  invention  and  successful  application 
of  numerous  and  unprecedented  devices  for  economizing 
the  use  of  metallic  money,  must  at  the  same  time  have  been 
equivalent  to  a  constant  comparative  increase  in  the  supply 
of  precious  metals  for  coinage  purposes.  Still  another  factor 
exercising  a  disturbing  influence  on  the  price  of  silver,  and 
preventing  its  price  recovery,  undoubtedly  grows  out  of  the 
fiscal  relations  of  Great  Britain  with  India.  The  regular 
annual  sales  at  London  of  India  Council  bills — the  character 
of  which  has  been  heretofore  explained  (see  page  229) — are 
in  the  nature  of  forced  sales  of  silver,  and  at  present  aver- 
age abojit  $45,000,000  per  annum.  How  much  effect  these 
sales,  at  the  point  where  the  silver-bullion  trade  of  the  world 
centers,  have  had  in  depressing  the  market  price  of  silver, 
is  undetermined ;  but  that  it  has  not  been  unimportant  can 
not  well  be  doubted. 

Attention  is  next  asked  to  the  character  of  the  economic 
disturbances  which  have  resulted  from  the  change  since  1873 
in  the  relative  values  of  gold  and  silver.  Omitting  from 
consideration  the  extreme  views  on  this  subject,  in  which 
silver  seems  to  be  regarded  in  the  sense  of  a  personality  that 
has  been  unjustly  and  designedly  "  outlawed  "  and  deprived 
of  some  ancient  prerogative,  the  disturbances  in  question 
are  the  same  in  character  as  have  always  accompanied  the 


ing— i.e.,  from  a  product  of  $27,258,000  in  1884  to  $33,000,000  in  1886  and 
$37,570,000  in  1887. 


236  RECENT  ECONOMIC  CHANGES. 

use  of  a  depreciated,  fluctuating  currency,  with  this  addi- 
tional and  novel  peculiarity — namely,  that  while  heretofore 
depreciation  of  currency  has  been  due  to  the  forced  issue  of 
redundant  and  irredeemable  paper  money  or  debased  coin, 
and  has  been  local  in  its  influence,  the  present  experience 
is  due  to  a  depreciation  in  the  value  of  one  of  the  precious 
metals  with  reference  to  the  other,  and  extends  to  many 
countries  in  very  different  degrees.  Let  us  particularize 
these  disturbances,  and  see  how  serious  or  otherwise  have 
been  their  resulting  influence. 

In  the  United  States  all  the  evil  which  has  thus  far  been 
experienced  has  been  solely  from  apprehensions  of  evil  in 
the  future,  which  in  turn  have  been  occasioned  by  the  cir- 
cumstance that  the  United  States,  in  harmony  with  her 
protective  policy,  buys  from  the  owners  of  the  (present) 
most  productive  and  cheaply  worked  silver-mines  in  the 
world,  silver  bullion  for  coinage  to  the  value  of  $2,000,000 
monthly,  irrespective  of  any  current  demand  or  necessity 
for  such  coinage  on  the  part  of  her  own  people.  In  the 
coinage  system  of  Great  Britain  the  function  of  silver  re- 
mains as  it  has  for  a  long  period,  almost  as  unimportant  as 
that  of  copper.  In  Germany,  "  although  the  imperial  mark 
is  now  everywhere  recognized  as  the  standard,  all  Germans, 
whether  they  live  in  Bavaria,  Prussia,  or  Hanover,  are  able 
to  sell  their  commodities  with  the  consciousness  that  the 
'  marks '  they  receive  in  payment  for  them  are  good  money, 
with  the  same  purchasing  power,  whether  paid  out  as  silver 
thalers  or  as  gold  crowns."* 

In  the  other  states  of  Europe,  the  currencies  of  which 
are  on  a  specie-paying  basis,  the  situation  is  substantially 
the  same  as  in  Germany.  In  exclusively  silver-using  coun- 
tries, like  India  and  Mexico,  the  decline  in  the  value  of 
silver  has  not  appreciably  affected  its  purchasing  power  in 


*  Speech  of  Mr.  H.  H.  Gibbs,  a  director  of  the  Bank  of  England,  before 
the  Birmingham  (England)  Chamber  of  Commerce,  1886. 


SILVER  EXPERIENCE  OF  MEXICO.  237 

respect  to  all  domestic  products  and  services ;  but  the  silver 
of  such  countries  will  not  exchange  for  the  same  amount 
of  gold  as  formerly,  and  it  might  be  supposed  that,  owing 
to  this  change  in  the  relative  value  of  the  two  metals,  the 
silver  of  India,  Mexico,  and  other  like  countries  would  pur- 
chase correspondingly  less  of  the  commodities  of  foreign 
countries  which  are  produced  and  sold  on  a  gold  basis. 
But  the  people  of  such  countries  have  not  thus  far  been 
sensible  of  any  losses  to  themselves  thereby  accruing,  for 
the  reason  that  the  gold  prices  of  such  foreign  commodi- 
ties as  they  are  in  the  habit  of  buying  have  declined  in  a 
greater  ratio  since  1873  than  has  the  silver  which  constitutes 
their  standard  of  prices — a  condition  of  things  which  Don 
Francisco  Bulnes,  the  distinguished  Mexican  economist,  in 
a  recent  official  report,  has  exemplified  to  his  countrymen 
by  the  following  felicitous  illustration : 

"  Two  merchants,  named  Mexico  and  Foreigner,  ex- 
change annually  cotton  shirtings  for  silver  dollars :  Mexico 
delivers  $100,  and  receives  from  Foreigner  one  hundred 
pieces  of  cotton  shirting.  By  the  depreciation  of  silver,  it 
results  that  Foreigner  only  wishes  to  accept  the  Mexican 
dollar  for  eighty-six  cents  for  each  one,  but  gives  in  ex- 
change each  piece  of  cotton  shirting  for  sixty-six  cents. 
"Which  of  the  two  will  be  the  loser  ? "  *  Nevertheless,  if 
silver  had  maintained  its  former  relative  value  to  gold,  the 
benefit  accruing  to  silver-using  nations  from  the  decline  in 
the  prices  of  commodities  through  improvements  in  their 
production  and  distribution  might  have  been  greater ;  but, 
if  so,  the  loss  does  not  appear  to  have  been  made  by  them  a 
cause  of  complaint. 

All  the  evidence  seems  to  indicate  that  the  economic 
disturbances  contingent  on  the  decline  in  the  value  of  silver, 

*  In  a  subsequent  part  of  his  report  M.  Bulnes  shows  that,  if  it  is  certain 
that  Mexican  silver  is  worth  less  than  formerly  in  foreign  markets  on  ex- 
change, its  cost  of  production  has  declined  to  an  extent  that  fully  compensates 
for  any  such  depreciation. 


238  RECENT  ECONOMIC  CHANGES. 

apart  from  what  have  been  due  to  the  apprehension  of  evil 
(or  scare),  have  thus  far  been  almost  exclusively  confined  to 
the  trade  or  financial  intercourse  between  the  gold-standard 
and  the  silver-standard  nations,  or  between  the  states  of 
Western  Europe  and  the  United  States,  and  the  nations  of 
the  Eastern  hemisphere  and  of  Central  and  South  America ; 
and  that  the  manifestations  of  these  disturbances  have  been 
greatest  in  England  and  Holland,  where  the  foreign  trade 
of  the  silver-using  countries  largely  centers.  And  it  seems 
further  to  be  admitted  that  these  disturbances  have  not 
resulted  so  much  from  a  fall  in  the  value  of  silver  per  se  as 
from  the  uncertainties  or  fluctuations  in  its  price,  or,  as 
commonly  expressed,  in  the  rates  of  exchange — an  eminent 
merchant  of  Manchester,  England,  largely  engaged  in  trade 
with  India  and  the  East,  being  reported  as  saying,  at  the 
meeting  of  the  British  Association  (September,  1887),  that 
with  the  present  excellent  telegraph  service,  and  a  level 
(non-fluctuating)  monetary  basis,  exchange  in  India  would 
be  as  steady  as  in  New  York.  In  all  this  there  is,  however, 
nothing  unprecedented  or  in  the  nature  of  the  unexpected ; 
nothing  which  the  world  has  not  heretofore  repeatedly  ex- 
perienced. For  it  is  to  be  remembered  that  fluctuations  in 
exchange  are  the  invariable  accompaniment  of  trade  with 
nations  using  a  depreciated  and  fluctuating  currency ;  and 
that  there  is  no  good  reason  for  supposing  that  the  disturb- 
ances which  have  characterized  the  trade  of  Europe  with 
India  and  the  East  during  recent  years,  from  fluctuations 
in  the  price  of  silver,  have  been  any  different  in  kind  than, 
or  as  great  in  degree  as,  those  which  characterized  the  trade 
of  Europe  with  the  United  States  from  1861  to  1879,  or 
which  characterize  to-day  the  trade  of  the  outside  world 
with  Russia,  whose  currency  is  depreciated  and  fluctuating. 
Moreover,  the  difficulties  arising  from  the  uncertainties  of 
exchange,  at  least  between  England  and  India,  appear  to 
have  been  greatly  exaggerated.  Mr.  Lord,  a  director  of 
the  Manchester  (England)  Chamber  of  Commerce,  testified 


TRADE  OF  INDIA.  239 

before  the  Commission  on  the  Depression  of  Trade,  in  1886, 
that,  "  so  far  as  India  was  concerned,  it  is  not  necessary  to 
run  any  risk  at  all"  from  the  uncertainties  of  exchange. 
Mr.  Bythell  (representing  the  Bombay  Chamber  of  Com- 
merce) testified  before  the  same  commission:  "He  [Mr. 
Gibbs]  says  that  commerce  with  India  is  paralyzed.  I  deny 
the  assertion.  There  is  no  difficulty  in  negotiating  any 
transaction  for  shipping  goods  to  India,  and  in  securing 
exchange."  It  is  also  generally  recognized  that,  owing  to 
telegraph  correspondence  and  rapid  steam  communication, 
the  risk  in  transacting  business  between  different  countries, 
contingent  on  fluctuations  in  exchange,  is  being  gradually 
eliminated,  inasmuch  as  sales  and  purchases,  or  remittances, 
and  all  the  incidents  of  exchange,  freights,  commission,  etc., 
can  be  practically  arranged  between  the  operators  at  one  and 
the  same  time.* 

But  whatever  may  have  been  the  disturbances  resulting 
from  fluctuations  in  rates  of  exchange  between  Great  Britain 
and  the  silver-using  countries  (of  which  India  is  the  chief), 
contingent  on  the  fluctuations  in  recent  years  in  the  price 
of  silver,  these  disturbances  do  not  appear  to  have  had  any 
effect  up  to  1884-'85  in  checking  the  volume  of  British 
trade  with  Eastern  nations,  or  in  changing  the  relations  of 
exports  and  imports  that  previously  existed.  In  fact,  there 
has  been  an  enormous  expansion  of  British  trade  with  such 
countries  as  use  a  silver  currency,  since  the  fall  in  the  price 
of  silver  commenced.  Thus,  from  returns  officially  pre- 
sented to  the  British  Gold  and  Silver  Commission,  1886,  it 
was  established  that  the  trade  of  Great  Britain  with  India 
since  1874  had  relatively  grown  faster  than  with  any  for- 

*  "  If  trade  can  go  on  profitably  between  countries  having  an  inconvertible 
paper  of  a  widely  fluctuating  kind  and  the  rest  of  the  world,  a  fortiori,  it  can 
go  on  between  gold  and  silver  countries.  The  exchange  is  a  hindrance  and 
obstacle,  as  many  other  things  are  hindrances  and  obstacles,  but  it  is  nothing 
more.  .  .  .  Such  difficulties  are  the  ordinary  incidence  of  trade  and  life,  and 
will  be  dealt  with  like  other  difficulties  of  a  far  more  serious  kind  by  those 
concerned." — London  Times,  September  14,  1886. 


240  RECENT  ECONOMIC  CHANGES. 

eign  country,  "  except  the  United  States  and  perhaps  Hol- 
land." Assuming  100  to  represent  the  trade  between  the 
two  countries  in  1874-'75,  the  imports  from  the  United 
Kingdom  into  India  rose  from  100  to  154  in  1884-'85,  and 
the  exports  from  India  to  the  United  Kingdom  from  100  to 
149. 

Much  also  has  been  said  respecting  the  serious  injury 
which  the  export  trade  in  cotton  manufactures  from  Eng- 
land to  India  has  sustained  in  recent  years  in  consequence 
of  the  "  dislocation  "  of  the  money  of  England's  Indian  cus- 
tomers. But  the  facts  do  not  bear  out  such  statements. 
Taking  the  number  100  as  representing  the  condition  of 
the  cotton-fabric  export  trade  of  England  with  India  in 
1874,  the  numbers  for  1886  were,  respectively,  134  for 
quantity  and  96  for  value ;  and  this  change  in  value,  as  was 
testified  to  before  the  Gold  and  Silver  Commission,  has  "  oc- 
curred since  1883  " ;  or  was  coincident  with  a  recognized 
increase  at  that  date  in  the  manufacturing  capacity  of  the 
cotton-factories  of  Europe  and  the  United  States,  greatly  in 
excess  of  any  former  period.* 

In  like  manner  the  official  returns  also  show  that  while 
India  during  recent  years  has  largely  increased  her  exports 
of  domestic  cotton  fabrics — cloth  and  yarn — to  China  and 
Java,  the  exports  of  like  products  from  England  to  these 
same  countries  from  1875  to  1884-'85 — the  period  covering 
the  greatest  decline  in  the  price  of  silver  (or  of  the  fall  in  ex- 

*  In  1870  the  British  export  of  cotton  piece-goods  to  India  was  returned  at 
923,000,000  yards,  representing  28'4  per  cent  of  the  entire  trade  of  the  United 
Kingdom  with  India.  In  1884  the  export  of  these  same  goods  was  1,791,000,- 
000  yards,  or  40'6  per  cent  of  the  entire  trade.  In  respect  to  cotton  yarns  the 
British  exports  to  India  for  1870  were  31,000,000  pounds,  or  16*5  per  cent 
of  the  total  exports ;  and  in  1884,  49,000,000  pounds,  or  18-1  per  cent  of 
the  total  exports.  The  bulk  of  the  trade  of  Great  Britain  is  with  gold-using 
countries ;  and  yet,  while  the  trade  of  India  with  Great  Britain  was  8-3  per 
cent  of  the  whole  trade  of  the  kingdom  in  1870,  it  constituted  in  1883  as  much 
as  9-9  per  cent  of  the  whole  trade. —  Testimony  before  the  Gold  and  Silver 
Commission  of  Mr.  HENBY  WATZRFIELD,  Financial  Secretary  of  the  India 
Office,  London.  (See  First  Report  of  the  Commission,  pp.  122, 123.) 


BRITISH  COTTON  EXPORTS.  241 

change) — also  continually  increased ;  or  for  1884  were  four- 
teen per  cent  in  the  case  of  piece-goods,  and  thirty-two  per 
cent  in  yarn,  greater  in  the  aggregate  than  they  were  in  1875. 
Subsequent  to  1884-'8o  British  foreign  trade  in  respect  to 
cotton  fabrications  was  for  a  time  less  favorable;  but  for 
the  year  1888,  the  export  of  cloths  was  5,038,469,400  yards 
(the  largest  on  record),  and  of  yarns,  255,820,200  pounds, 
which  amount  has  been  only  twice  exceeded  in  previous 
years — 1883  and  1884.  Comparing  the  distribution  of  1888 
with  1887,  India  and  China  increased  their  purchases  of 
British  cotton  fabrics  in  1888  to  the  extent  of  117,500,000 
yards,  and  of  yarns  to  the  extent  of  15,500,000  pounds. 

It  is  undoubtedly  true  that  the  Government  of  India,  in 
selling  its  remittances  in  silver — India  Council  bills — to 
cover  its  liabilities  in  England,  for  a  less  price  in  gold  than 
formerly,  constantly  experiences  a  degree  of  financial  em- 
barrassment and  perhaps  loss.  But,  on  the  other  hand,  it  is 
admitted  that  the  condition  of  India  has  never  been  more 
prosperous  and  encouraging  than  at  present. 

Another  pertinent  example  of  the  slight  effect  the 
change  in  the  relative  values  of  gold  and  silver  has  had  upon 
the  volume  of  the  international  trade  of  exclusively  silver- 
using  countries,  and  one  not  in  any  way  connected  with  the 
trade  of  Europe  or  India,  is  afforded  by  the  recent  trade  ex- 
periences of  Mexico.  This  country  has  almost  exclusively  a 
silver  currency  ;  and  the  fluctuations  in  the  price  of  silver 
since  1873 — Mexican  exchange  having  varied  in  New  York 
in  recent  years  from  114  to  140* — would  seem  necessarily 
to  have  been  a  disturbing  factor  of  no  little  importance  in 
the  trade  between  the  United  States  and  Mexico.  But  the 
official  statistics  of  the  trade  between  the  two  countries 
since  1873  (notoriously  undervalued)  fail  to  show  that  any 
serious  interruption  has  occurred ;  but,  on  the  contrary,  that 


*  That  is,  one  hundred  and  forty  Mexican  dollars  to  one  hundred  dollars 
of  the  United  States  gold  .standard. 


242  RECENT  ECONOMIC  CHANGES. 

the  total  volume  of  trade — exports  and  imports — continu- 
ally increases. 

In  recent  years  there  has  been  a  notable  increase  in  the 
cotton-manufacturing  industry  of  India — i.  e.,  from  eight- 
een factories,  with  450,156  spindles  and  4,972  looms  in  1873, 
to  seventy  factories,  with  1,698,000  spindles  and  14,635 
looms  in  1884 ;  and  the  cause  of  this  increase,  which  is  en- 
abling India  to  compete  (as  never  before)  *  with  Lancashire 
(England)  in  supplying  cotton  yarn  and  fabrics  to  the 
Indian  and  other  Eastern  markets,  and  to  the  alleged  serious 
detriment  of  English  interests,  is  popularly  believed  and 
asserted  to  have  been  occasioned  mainly  by  the  decline  and 
fluctuations  in  the  price  of  silver. 

There  has  been  much  discussion  on  this  subject  in  Eng- 
land and  India,  and  much  disagreement  in  opinion  among 
investigators ;  but  a  majority  of  the  Board  of  Directors  of 
the  Manchester  (England)  Chamber  of  Commerce  after  an 
exhaustive  inquiry,  has  reported,  that  the  main  cause  that 
has  favored  the  rapid  increase  of  mills  in  India,  and  enabled 
them  to  a  great  extent  to  supply  China  and  Japan  with 
yarns,  which  formerly  were  shipped  from  Lancashire,  is 
their  geographical  position,  which  places  them  in  close 
proximity  to  the  cotton-nelds  on  the  one  hand,  and  to  the 
consuming  markets  on  the  other.  The  net  advantage  to 
the  Indian  spinner  from  these  circumstances,  over  his  com- 
petitor in  England,  after  allowing  for  his  extra  outlay  for 
machinery,  and  consequently  enhanced  interest  and  depre- 
ciation, as  well  as  greater  expenditure  in  such  items  as  im- 
ported coals,  stores,  etc.,  was  estimated  by  the  committee  as 
equal  to  at  least  f  d.  per  pound  on  the  portion  of  their  out- 
put that  is  shipped  to  China  and  Japan,  and  ffd.  to  %d.  per 
pound  on  what  is  consumed  in  India  itself,  f  Other  circum- 

*  The  exports  of  cotton  yarn  from  India  have  risen  from  about  7,000,000 
pounds  in  1877  to  113,000,000  in  1887. 

t  A  minority  of  the  board,  on  the  other  hand,  came  to  the  conclusion  that 
the  principal  cause  which  has  enabled  Bombay  spinners  to  supersede  those  of 


INDUSTRIAL  AWAKENING  IN  INDIA.  243 

stances,  such  as  cheaper  labor  and  longer  factory  hours,  may 
have  also  favored  the  Indian  manufacturers ;  but  these  dif- 
ferences as  respects  the  condition  of  labor  in  England  and 
India  have  existed  from  time  immemorial ;  and  the  real 
novelty  of  the  present  situation  is,  that  India,  with  railroads 
and  factories,  and  the  advantage  of  cheap  ocean  freights,  is 
now  emancipating  herself  from  chronic  sluggishness  and 
beginning  to  participate  in  the  world's  progress ;  and  under 
English  auspices,  and  largely  with  English  capital,  is,  for  the 
first  time,  extensively  utilizing  her  geographical  advantages 
and  her  cheap  and  abundant  labor  in  connection  with  labor- 
saving  machinery.  And  it  is  to  be  further  noted  that  her 
progress  in  cotton  manufacturing  exhibited  itself  unmis- 
takably some  years  before  the  commencement  of  the  decline 
in  silver ;  that  the  first  shipment  of  cotton  yarns  from  India 
to  China,  in  competition  with  yarns  of  English  make,  was  in 
1866,  and  that  between  1865  and  1873  the  increase  in  the 
number  of  cotton-spindles  in  India  was  in  excess  of  fifty- 
seven  per  cent.  * 

Lancashire  in  exporting  yarn  to  China  and  Japan  is  the  great  fall  in  Eastern 
exchange  since  1873.  The  geographical  advantage  is  admitted,  but  that,  it  ia 
pointed  out,  has  been  constantly  decreasing,  while  the  power  to  compete  with 
Lancashire  has  been  increasing. 

*  "  The  truth  is,  that  the  Bombay  cotton-spinners  have  by  their  energy 
and  enterprise  created  a  trade  with  China  that  had  no  existence  before.  India 
can  not  compete  with  Lancashire  in  the  finer  counts,  and  she  can  not  come 
near  us  for  spinning  counts,  for  which  our  cotton  is  suitable.  Lancashire  is 
not,  as  Lancashire  imagined,  losing  ground  in  China ;  only  Bombay  has, 
owing  to  the  energy  of  her  manufacturers,  gained  ground  immensely.  The 
cotton  grows  at  her  door,  labor  is  cheap  here,  and  freights  to  China  have  been 
reduced  by  one  half  since  1885."— Speech  of  M.K.  COTTON,  before  the  Manchester 
Chamber  of  Commerce. 

In  connection  with  this  subject,  the  following  extract  from  the  record  of 
the  examination  of  Mr.  H.  Waterfleld,  Financial  Secretary  of  the  India  Office, 
London,  before  the  British  Trade  and  Silver  Commission  (February,  1887),  IB 
important : 

Question  (Sir  T.  Farrer).  "  So  that,  while  India  has  been  doing  much  more, 
Lancashire  has  been  doing  more  than  she  did  before?" 

Answer.  "  Yes." 

Q.  "  Then  I  will  ask  you,  do  the  figures  [submitted]  justify  the  statement 


244  RECENT  ECONOMIC  CHANGES. 

Again,  it  is  a  popular  idea  that  the  steadily  increasing 
supply  to  the  markets  of  the  world  during  recent  years  of 
Indian  wheat,  the  product  of  low-priced  labor — seriously 
affecting,  through  its  competition,  the  prices  and  profits 
alike  of  the  agriculturists  of  the  United  States  and  of  Eu- 
rope— has  been  in  some  way  occasioned  by  the  change  in 
the  relative  values  or  purchasing  powers  of  gold  and  silver, 
consequent  on  the  "demonetization"  of  the  latter  metal. 
To  all  entertaining  this  idea  the  summary  of  evidence 
brought  out  by  the  British  Gold  and  Silver  Commission  in 
the  course  of  their  investigations  prosecuted  and  previously 
presented  (see  page  169)  is  worthy  of  attention. 

Evidence  was  also  submitted  to  the  British  Trade  De- 
pression Commission  in  1866  to  the  effect  that  the  increase 
of  the  acreage  under  wheat  in  India  "  exactly  agrees  with 
the  development  of  the  Indian  railways,"  and  that,  "  when 
more  railways  are  made  in  India,  a  very  much  larger  wheat 
production  will  immediately  follow."  * 

that  the  present  state  of  things — that  is,  the  fall  in  exchange — is  causing  the 
gradual  transfer  of  the  yarn-trade  of  China  to  India ;  that  the  exports  from 
England  have  steadily  declined  since  the  fall  of  silver  commenced,  while  those 
from  India  have  enormously  increased  2 " 

A.  "  The  increase  of  the  imports  from  India  may,  indeed,  be  termed 
enormous ;  but  it  is  not  correct  to  say  that  the  exports  from  England  have 
steadily  declined  since  the  fall  of  silver  commenced ;  and  I  think  that  the 
fall  in  exchange  is  not  the  cause  of  the  improvement  in  the  Indian  trade." 

Q.  "At  any  rate,  you  would  not  see  in  these  figures  any  reason  for  pro- 
tecting Lancashire  against  India  by  a  radical  alteration  of  our  currency 
system?" 

A.  "  No ;  I  should  think  it  as  objectionable  as  allowing  any  protection  of 
India  against  Lancashire." 

*  On  this  subject,  the  following  testimony  was  submitted  to  the  British 
Commission  on  the  Depression  of  Trade,  1886  ("  Third  Report,"  pp.  82  and 
83),  by  Mr.  W.  J.  Harris,  who  is  recognized  as  an  authority  in  England  on 
agricultural  subjects : 

"  Our  Indian  Empire  seems  able  to  extend  its  corn-growing  industry  to 
almost  any  extent,  and  to  produce  more  cheaply  than  any  other  country  in  the 
world.  I  am  aware  that  Sir  James  Caird  gave  a  somewhat  different  evidence 
on  this  question,  but  1  think  that  neither  Mr.  Giffen  nor  Sir  James  Caird  have 
taken  sufficiently  into  account  one  or  two  things  in  their  statistical  computa- 


ANALYSIS  OF  INDIA  PRICES.  245 

Of  late  years  the  Government  of  India  has  published 
an  annual  record  of  the  prices  of  food-grains  and  salt  in 
about  seventy  districts,  selected  as  typical  of  the  different 
parts  of  each  province.  An  analysis  of  the  data  thus  sup- 
plied (although  imperfect)  has  led  the  London  "Econo- 
mist "  *  to  the  following  conclusions : 

"That  whereas  in  1872  the  rupee  exchanged  for  35f  pounds  of 
wheat,  in  1885  it  could  command  in  exchange  about  39  pounds  of 
wheat.  In  the  interval,  therefore,  the  purchasing  power  of  the  rupee 
measured  in  wheat  increased  by  about  ten  per  cent.  Since  then,  how- 
ever, there  has  been  a  distinct  change.  In  1885  the  rupee  could  pur- 
chase on  an  average  no  more  than  35  pounds  of  wheat,  and  in  1886  it 
would  exchange  for  no  more  than  about  30  pounds.  Since  1884,  there- 
fore, the  value  of  the  rupee  in  exchange  for  wheat  in  India  appears  to 
have  fallen  about  twenty-five  per  cent,  and  it  is  obvious  that  such  a 
decline  invalidates  much  that  has  been  written  to  prove  that  the  fall 
in  the  price  of  silver  has  operated  as  a  bounty  upon  the  export  of  wheat 

tion.  They  both  maintain  that  the  population  of  India  is  too  large,  or  is  get- 
ting too  large,  for  the  means  of  production.  They  do  not  seem  to  remember 
that  every  unit  of  population  in  India  consumes  about  a  fifth  part  of  what  the 
unit  of  population  in  the  United  States  does.  It  ifl  a  comparison  between 
India  and  the  United  States.  Both  Sir  James  Caird  and  Mr.  GifFen  admit 
that  the  capabilities  of  the  United  States  are  very  enormous,  but  they  think 
that  the  capabilities  of  India  are  comparatively  very  small.  I  differ  from  them, 
and  I  will  give  my  reasons.  If  we  follow  (on  the  maps  of  India)  the  course 
of  the  railways  which  have  been  made  for  some  time,  you  will  find  that  the 
acreage  under  wheat  exactly  agrees  with  the  development  of  those  railways ; 
and  it  appears  to  me  that,  when  more  railways  are  made  in  India,  a  very  much 
larger  wheat  production  will  immediately  follow.  I  have  made  several  in- 
quiries from  the  principal  merchants  who  do  business  with  India,  and  who 
have  agents  at  many  central  points,  and  they  all  agree  that  the  wheat  produc- 
tion in  India  is  not  nearly  developed  yet.  The  population  is  not  encroaching 
on  the  means  of  subsistence  so  much  as  the  mere  statistician  would  argue, 
because  he  does  not  take  into  account  the  habits  of  the  people ;  and  I  believe 
that  the  United  States  population,  in  consequence  of  the  habits  of  its  people, 
is  encroaching  just  as  fast  on  their  means  of  subsistence  as  are  the  people  of 
India.  There  is  a  large  acreage  in  India  that  is  not  fully  cultivated  with  any- 
thing at  the  present  time,  and,  where  it  is,  it  is  very  imperfectly  cultivated, 
and  the  prices  of  produce  are  exceeding  low  in  places  remote  from  railway 
communication.  Agriculture  is  very  rude ;  they  have  very  little  machinery. 
The  system  might  be  greatly  improved,  and  the  produce  thereby  increased." 
*  London  "  Economist,"  June  80,  1888. 


246  RECENT  ECONOMIC  CHANGES. 

from  India.  The  argument  has  been  that,  owing  to  the  fall  in  silver, 
the  gold  which  the  seller  of  Indian  wheat  here  gets  for  his  produce  is 
worth  twenty-five  per  cent  more  rupees  than  before,  and  that,  as  the 
rupee  commands  in  India  the  same  amount  of  wheat  it  formerly  did, 
the  fall  in  silver  is  practically  equivalent  to  a  bounty  of  twenty-five 
per  cent  upon  shipments  hither.  But  if  the  purchasing  power  of  the 
rupee,  instead  of  remaining  unchanged,  has  fallen  twenty-five  per  cent, 
as  the  official  record  of  prices  would  seem  to  show,  then  obviously  this 
argument  and  the  theories  that  have  been  based  upon  it  fall  to  the 
ground." 

A  comparison  of  the  price  of  wheat  measured  in  gold  with  its  price 
measured  in  silver, "  which  may  be  done  in  a  rough  way  by  comparing 
our  (London) '  Gazette '  average  with  the  Indian  average,  shows  that, 
while  gold  has  slightly  gained  in  purchasing  power,  the  rupee  has  de- 
cidedly lost,  and  the  inference  is  that  it  is  to  the  diminished  purchas- 
ing power  of  the  rupee,  and  not  to  a  change  in  the  value  of  wheat,  that 
the  rise  in  the  Indian  price  (from  2'6  rupees  in  1885  to  3'7  rupees  in 
1887)  was  due.  Neither  in  the  price  of  rice  nor  of  salt  was  there  any 
movement  corresponding  to  that  in  wheat.  Of  both  of  these  products 
the  rupee  commanded  on  the  average  larger  quantities  than  in  1885." 

The  evidence,  therefore,  warrants  the  belief  that  the  fall 
in  recent  years  in  the  price  of  Indian  wheat,  and  its  conse- 
quent appearance  as  an  important  element  of  supply  in 
European  markets,  is  to  be  accounted  for  mainly  by  changes 
in  the  conditions  of  its  production  and  supply,  and  not  by 
any  changes  in  the  relative  values  of  gold  and  silver ;  and 
further,  that  if  every  measure  for  extending  the  monetary 
use  of  silver,  which  has  been  proposed,  should  be  carried 
out  to  the  fullest  extent,  it  would  produce  no  sensible  influ- 
ence in  restraining  the  Indian  ryot  from  competing  with 
American  and  European  agriculturists  in  the  sale  of  wheat 
in  the  world's  markets. 

The  whole  subject  of  the  disturbing  influence  of  the 
decline  in  the  value  of  silver  on  the  trade  between  gold  and 
silver  using  countries  is  complicated  and  difficult  of  analy- 
sis, and  the  opinions  of  persons  practically  interested  in  such 
trade  are  not  harmonious ;  but  it  is  difficult  to  see  how  one 
can  investigate  the  subject,  with  the  light  of  the  experience 


CONDITIONS  OP  INTERNATIONAL  TRADE.        247 

which  the  years  that  have  elapsed  since  1873  has  contributed, 
without  coming  to  the  conclusion  that  the  seriousness  of 
the  disturbances  has  been  greatly  exaggerated,  and  that  the 
expediency  of  attempting  to  provide  remedies  by  legislation 
for  such  as  may  be  acknowledged  to  exist — if  legislation 
were  practical — is  very  doubtful. 

In  forming  an  opinion  in  respect  to  this  problem,  it  is 
important  to  steadily  keep  in  mind  the  fact  that  inter- 
national trade  is  trade  in  commodities,  and  not  in  money ; 
and  that  the  precious  metals  come  in  only  for  the  settlement 
of  balances.  In  fact,  all  such  exchanges  are,  to  within  a  very 
minute  fraction,  the  result  of  an  organized  and  elaborate 
system  of  barter,  and  the  principle  of  barter  prevails  in 
them,  and  determines  to  a  great  extent  the  methods  em- 
ployed. The  trade  between  England  and  India  is  an  ex- 
change of  service  for  service.  Its  character  would  not  be 
altered  if  India  should  adopt  the  gold  standard  to-morrow, 
or  if  she  should,  like  Kussia,  adopt  an  irredeemable  paper 
currency,  or,  like  China,  buy  and  sell  by  weight  instead  of 
tale.  Will  India  give  more  wheat  for  a  given  amount  of 
cloth  because  she  uses  silver  instead  of  gold  in  her  internal 
trade  ?  Will  England  give  less  of  cloth  for  a  given  amount 
of  wheat  because  she  keeps  her  accounts  in  pounds,  shillings, 
and  pence  instead  of  in  rupees  ?  Unless  all  the  postulates 
of  political  economy  are  false — unless  we  are  entirely  mis- 
taken in  supposing  that  men  in  their  individual  capacity, 
and  hence  in  their  aggregate  capacity  as  nations,  are  seeking 
the  most  satisfaction  with  the  least  labor,  we  must  assume 
that  India,  England,  and  America  produce  and  sell  their 
goods  to  one  another  for  the  most  they  can  get  in  other 
goods,  regardless  of  the  kind  of  money  that  their  neighbors 
use  or  that  they  themselves  use.  A  silver  currency  does  not 
give  any  additional  strength  to  a  Hindoo  ryot,  nor  does  it 
increase  the  fertility  of  his  soil,  or  add  to  the  number  of 
inches  of  his  rainfall.  Nor  does  a  gold  currency  detract  in 
any  way  from  the  capability  and  resources  of  his  rival,  the 


248  RECENT  ECONOMIC  CHANGES. 

American  farmer.  Nor  does  the  difference  in  their  respect- 
ive currencies  affect  the  judgment  of  the  buyer  of  wheat 
in  Liverpool.  Is  any  single  factor  in  the  elements  of  pro- 
duction and  transportation,  by  which  alone  the  terms  of 
competition  are  settled,  changed  by  the  local  currencies  of 
the  several  countries,  or  the  mutations  thereof  ?  Surely  no 
mutations  were  ever  more  sudden  or  violent  than  those  of 
the  currency  of  the  United  States  during  the  late  war. 
They  were  not  without  their  effects ;  but  the  effects  were 
not  of  a  kind  to  change  the  terms  of  competition  in  inter- 
national trade.* 


*  The  fallacy  of  the  assertion,  so  frequently  made  to  the  agriculturists  of 
England  and  the  United  States,  that  the  fall  in  the  gold  price  of  silver  has 
acted  as  a  bounty  to  the  Indian  wheat-producer,  and  unnaturally  driven  down 
the  price  of  wheat  to  the  great  injury  of  the  English  and  American  wheat-pro- 
ducers, has  also  been  admirably  exposed  by  Mr.  George  "W.  Medley  in  one  of 
the  recent  "leaflets"  published  by  the  Cobden  Club.  The  argument  of  those 
who  maintain  the  existence  and  influence  of  a  bounty  may  be  stated  as  fol- 
lows :  They  say,  and  truly,  that  some  fifteen  years  ago  the  pound  sterling 
could  buy  10  silver  rupees  in  India,  which  were  worth  2s.  each ;  whereas  now 
it  can  buy  14}/£  rupees,  which  are,  consequently,  worth  now  only  about  Is. 
4%d.  They  say  further,  and  also  truly,  that  prices  in  India  in  silver,  being 
about  the  same  as  at  the  former  period,  it  follows  that  a  pound  sterling  laid 
out  there  in  wheat  now  buys  forty-five  per  cent  more  thereof  than  it  did ;  and 
hence  it  is  argued  that  the  Indian  producer  has  been  enabled  to  undersell  the 
English  grower  in  the  home  market,  and  to  bring  about  the  fall  in  wheat  from 
40*.  to  80s. ;  and  this  difference  of  10s.  per  quarter,  it  is  claimed,  constitutes 
a  bounty  on  the  export  of  Indian  wheat  to  England. 

To  this  Mr.  Medley  replies :  "  There  never  was  a  greater  delusion.  The 
fallacy  lies  in  reckoning  the  pound  sterling  in  1873  and  in  1889  as  the  same 
thing.  Physically  speaking,  this  is  true,  for  the  coin  is  of  the  same  weight 
and  fineness  in  gold.  Economically  speaking,  it  is  not  the  same  thing,  for  a 
pound  sterling  in  1889  represents  a  greater  quantity  of  human  effort  than  it 
did  in  1873.  To  obtain  a  pound  sterling  in  1873  a  quantity  in  other  commodi- 
ties had  to  be  given  for  it,  which  may  be  represented  by  the  figure  100.  In 
1889,  owing  to  the  fall  in  prices,  the  quantity  to  be  given  in  exchange  is,  say, 
145.  If  the  holder  of  the  pound  sterling  can  now  get  forty-five  per  cent  more 
wheat  for  it  than  he  did  in  1873,  he  at  the  same  time  has  to  give  forty-five  per 
cent  more  of  other  commodities  in  order  to  get  it,  the  same  quantity  of  Indian 
wheat  exchanging  for  the  same  quantity  of  English  commodities  whatever  year 
be  taken.  There  is  no  more  bounty  or  bonus  on  the  export  of  Indian  wheat 
to  England  than  there  is  on  the  export  of  English  commodities  to  India." 


ECONOMIC  CONDITION  OF  HOLLAND.  249 

It  may  be  that  the  Indian  wheat-grower  has  been  enabled 
by  the  decline  in  silver  to  get  labor  for  less  wages  than 
before,  and  has  thus  gained  an  advantage  over  his  competi- 
tors in  America  and  Australia ;  but  the  evidence  is  all  to 
the  effect  that  wages  generally  in  India  in  recent  years  have 
advanced  and  not  declined.*  But  the  terms  of  international 
competition  are  not  altered  by  any  division  of  the  joint 
product  of  labor  and  capital  in  one  of  the  competing  coun- 
tries. The  person  that  has  the  most  of  a  grievance  growing 
out  of  the  present  state  of  the  wheat-trade  is  the  American 
farmer,  who  is  restricted  from  buying  in  the  same  market 
in  which  he  sells  his  surplus  wheat  to  as  good  advantage  as 
his  competitors ;  but  this  is  not  due  to  any  change  in  the 
value  of  silver,  but  to  the  fiscal  policy  of  his  own  Govern- 
ment. 

In  Holland  the  disturbances  assumed  to  have  been  occa- 
sioned by  the  decline  in  the  value  of  silver  have  attracted 
public  attention  to  an  even  greater  degree  than  in  England. 
But  even  here  the  disturbances  have  been  mainly  restricted 
to  the  commercial  and  financial  relations  of  Holland  with 
her  East  Indian  colonies,  Java,  Sumatra,  and  other  islands, 
and  have  been  specially  occasioned  by  the  extraordinary 
fall  in  recent  years  in  the  prices  of  the  principal  exports 
of  these  islands,  namely,  sugar,  and  coffee.  But  no  com- 

"  It  may  be  that  prices  of  commodities  in  India  have  not  risen  to  corre- 
spond with  the  fall  in  silver.  If  such  is  the  case,  then  the  producer  in  India 
of  exported  products  will  win  until  the  equilibrium  is  restored — that  is,  he 
will  win  so  long  as  the  process  is  going  on.  On  the  other  hand,  however,  the 
Indian  consumer  of  imported  commodities  will  lose,  for  he  buys  at  a  gold 
price,  and  has  to  pay  with  depreciated  rupees.  These  two  parties  do  not  win 
and  lose  to  each  other ;  but  they  present  the  two  opposite  facets  of  the  com- 
bined effect  of  the  fall  in  silver  on  India.  Therefore,  whatever  the  Indian 
wheat-producer  wins,  he  wins,  not  from  his  European  customer  nor  from  his 
American  or  Russian  competitor,  but  at  the  expense  of  his  Indian  neighbor, 
and,  if  there  was  a  desire  to  put  an  end  to  the  existing  state  of  things,  the  way 
to  do  it  would  be  to  hasten  the  movement  of  silver  to  the  East,  so  as  to  com- 
plete the  transition  and  raise  the  prices  in  India  as  soon  as  possible." — PROF. 
Boon. 


250  RECENT  ECONOMIC  CHANGES. 

mercial  fact  is  capable  of  more  complete  demonstration 
than  that  the  fall  in  the  price  of  these  great  staples  has 
been  in  no  way  contingent  upon  any  change  in  the  value 
of  silver.* 

The  idea  of  disturbance  in  connection  with  the  decline 
in  the  value  of  silver  has  been  and  is  pre-eminently  con- 
nected with  an  annunciation  of  two  propositions : — 

First,  that  the  almost  universal  decline  in  the  prices  of  the 
world's  staple  commodities  since  1873  has  been  occasioned 
by  the  fall  in  the  price  of  silver ;  and,  second,  that  a  decline 
of  prices  is  an  evil.  The  first  of  these  propositions  rests 
upon  an  assumption  which  can  not  be  verified  by  any  con- 
clusive evidence  whatever ;  and,  as  for  the  second,  if  the  fall 
of  prices  has  been  mainly  due,  as  has  been  demonstrated,  to 
natural  and  permanent  causes,  namely,  the  increased  power 
of  mankind  in  the  work  of  production  and  distribution, 
then  the  result,  by  creating  a  greater  abundance  of  all  good 
things,  and  bringing  a  larger  amount  of  the  same  within 
the  reach  of  the  masses  for  consumption  and  enjoyment, 
has  been  one  of  the  greatest  of  blessings.  All  permanent 
reductions  of  the  prices  of  the  great  staple  products  which 
are  necessary  for  the  world's  existence  and  comfort,  are  fur- 
thermore indications  that  a  greater  abundance,  with  less  and 
less  toil  or  effort,  has  come  to  all  those  who  depend  upon 
each  day's  labor  to  meet  each  day's  needs ;  and  he  who  at- 
tempts to  check  or  counteract  such  a  reduction  of  prices  is 

*  "  During  the  last  five  years  Java  has  been  subject  to  the  most  fearful 
natural  calamities.  They  have  had  a  cattle-plague  which  destroyed  almost  the 
whole  cattle  in  parts  of  the  island ;  they  have  had  cholera ;  they  have  had 
earthquakes  of  an  unprecedented  character ;  and  they  have  had  further  an 
extraordinary  fall  in  the  values  of  their  principal  exports,  which  are  sugar  and 
coffee,  owing,  in  the  first  place,  to  the  competition  of  beet-root  sugar  in  Eu- 
rope, and,  in  the  second  place,  to  the  fact  that  South  America  has  been  able 
to  export  coffee  more  favorably  than  Java ;  and  to  this  extent  we  can  trace  a 
loss  of  £5,000,000  annually  in  these  two  articles.  That  Las  been  the  result  in 
the  last  five  years  of  natural  causes,  without  any  question  of  currency  at 
all." — Testimony  of  MR.  PAUL  F.  TIDMAN,  East  India  merchant.  First  Report 
of  the  British  Gold  and  Silver  Commission,  p.  142,  1886. 


LAW  OP  THE  USE  OF  METALLIC  MONEY.       251 

opposed  to  increasing  civilization  and  an  enemy  of  the  poor. 
The  question  of  true  importance  with  every  one  is,  not  what 
amount  of  money,  but  what  amount  of  useful  things,  can  be 
obtained  in  exchange  for  what  is  sold. 

Any  discussion  of  the  economic  disturbances  resulting 
from  changes  in  the  relative  values  of  the  precious  metals 
would  be  incomplete  that  failed  to  point  out  how  the  events 
that  originated  the  so-called  "  bimetallic  "  controversy  were 
the  natural  outcome  of  the  revolutionary  changes  in  the 
methods  of  production  and  distribution  that  have  occurred 
in  recent  years  in  all  countries  in  proportion  to  their  ad- 
vance in  civilization. 

It  is  not  easy  to  imagine  that  any  person  of  ordinary  in- 
telligence can  seriously  believe  that  the  enactment  of  laws 
looking  to  the  recognition  of  gold  as  the  single  standard  of 
value,  thereby  effecting  what  is  called  the  demonetization  of 
silver,  could  ever  have  resulted  from  mere  whim  or  caprice, 
or  with  a  view  of  occasioning  either  domestic  or  interna- 
tional economic  disturbance.  There  was  a  time  when  na- 
tions, with  the  expectation  of  receiving  benefit,  did  adopt 
policies  and  enact  laws  with  the  undisguised  and  sole  intent 
of  injuring  the  industry  and  commerce  of  neighbors  with 
whom  they  were  at  peace ;  but  happily  such  days  have  long 
past.  And  the  inference  is,  therefore,  fully  warranted  that 
whatever  steps  have  been  taken,  which  have  resulted  in  any 
territorial  restriction  of  the  use  of  silver  as  money,  have 
been  in  consequence  of  a  belief  by  the  parties — nations — 
thus  acting,  that  such  a  policy  was  called  for  by  change  in 
the  economic  condition  of  their  affairs,  and  was  likely  to  be 
to  them  productive  of  benefit.  Arid  the  answer  to  the  per- 
tinent question  as  to  what  benefit,  is  simply,  that  which 
might  be  expected  to  accrue  from  the  using  of  the  best 
rather  than  an  inferior  tool ;  or  of  a  money  instrumentality 
adapted  to  the  new  rather  than  to  the  old  conditions  of 
production  and  distribution. 

One  needs  but  to  stand  for  a  brief  time  at  the  marts  of 


252  RECENT  ECONOMIC  CHANGES. 

trade  in  countries  of  varied  degrees  of  civilization,  to  quickly 
recognize  and  understand  that  the  kind  of  money  a  country 
will  have  and  use,  depends  upon  and  will  vary  with  the 
extent  and  variety  of  its  productions,  the  price  of  labor,  and 
the  rapidity  and  magnitude  of  its  exchanges ;  and  investi- 
gation will  further  inform  him  that  when  mankind,  savage, 
semi-civilized,  civilized,  or  enlightened,  find  out  by  experimen- 
tation what  metal  or  other  instrumentality  is  best  adapted 
to  their  wants  as  a  medium  of  exchange,  that  metal  or  in- 
strumentality they  will  employ ;  and  that  statute  law  can  do 
little  more  than  recognize  and  confirm  the  fact.  In  truth, 
legislation  in  respect  to  money,  as  is  the  case  in  respect  to 
other  things,  never  originates  any  new  idea ;  "  but  merely 
enacts  that  that  which  has  been  found  beneficial  or  preju- 
dicial in  many  cases,  shall  be  used,  limited,  or  prohibited  in 
all  similar  cases  within  its  jurisdiction."  Thus,  in  all  coun- 
tries where  prices  are  low,  wages  small,  transactions  limited, 
and  exchanges  sluggish,  nothing  more  valuable  can  be  used 
as  money  for  effecting  the  great  bulk  of  the  exchanges  than 
copper ;  and  in  countries  like  Mexico  and  China,  even  the 
copper  coin  corresponding  to  the  American  "cent,"  the 
English  "  half -penny,"  and  the  French  "  sou,"  is  often  so 
disproportionate  in  point  of  value  to  the  wants  of  retail 
trade,  that  in  the  former  country  it  is  made  more  useful  by 
being  halved  and  quartered,  and  in  the  latter  is  replaced 
with  some  even  cheaper  metal,  as  iron  or  spelter.  The  wages 
in  all  such  countries  do  not  in  general  exceed  twenty  to 
twenty-five  cents  a  day,  and  the  sum  of  such  wages,  when 
represented  in  money,  must  be  capable  of  division  into  as 
many  parts  in  order  to  be  exchanged  for  the  many  daily 
necessities  of  an  individual  or  a  family.  But  with  wages  at 
twenty-five  cents  per  day,  the  use  of  coined  gold  would  ob- 
viously be  impracticable.  The  equivalent  of  a  day's  labor  in 
gold  would  be  too  small  to  be  conveniently  handled ;  the 
equivalent  of  an  hour's  labor  would  be  smaller  than  a  pin's 
head.  And  in  a  lesser  degree  would  be  the  inconvenience 


MONEY  OF  VARYING  CIVILIZATIONS.  253 

of  using  coined  silver  for  effecting  the  division  of  similar 
small  wages.* 

In  countries  of  higher  civilization,  but  still  of  compara- 
tively low  prices  and  limited  exchanges  (and  these  last 
mainly  internal  or  domestic),  silver  naturally  takes  the 
place  of  copper  as  the  coin  medium  of  exchange  and  as  the 
standard  of  value ;  and  as  more  than  a  thousand  million 
people  are  the  inhabitants  of  such  countries,  silver,  reckon- 
ing transactions  by  number  and  probably  also  by  amount, 
is  to-day  the  principal  money  metal  of  the  world. 

On  the  other  hand,  in  countries  of  high  wages,  rapid 
financial  transactions,  and  extensive  foreign  commercial  re- 
lations, the  natural  tendencies  are  altogether  different,  and 


*  In  many  of  the  sugar- producing  islands  of  the  West  Indies,  the  greatest 
number  of  the  separate  retail  purchases  at  the  established  stores  do  not  exceed 
from  two  to  three  cents  in  value.  In  the  island  of  Trinidad,  probably  seventy- 
five  per  cent  of  an  annual  importation  of  about  22,000,000  pounds  of  bread- 
stuffs  (110,000  barrels)  pass  into  the  ownership  of  the  laboring-cl asses  (whose 
average  annual  consumption  is  estimated  at  thirty-one  pounds  per  head), 
through  purchases  for  cash  of  quantities  rarely  exceeding  a  pound  at  any  one 
time. 

Corea,  a  country  which  until  recently  has  been  almost  unknown  to  the 
civilized  world,  affords  another  striking  illustration  of  the  principle  that  the 
kind  of  money  a  people  will  have  and  use,  if  left  free  to  choose,  will  be  de- 
termined by  the  nature  of  their  exchanges,  through  what  may  be  termed  a 
natural  process  of  evolution,  and  not  by  artificial  arrangements.  Thus  Corea 
has  been  proved  to  be  a  very  poor  country ;  raising  little  more  of  any  one 
product  than  will  suffice  for  home  consumption  ;  and  with  a  very  restricted 
internal  trade,  owing  to  small  production  and  the  lack  of  facilities  for  personal 
intercommunication  and  product  distribution.  To  the  majority  of  her  people 
a  monthly  income  equivalent  to  two  or  three  dollars  is  represented  to  be 
sufficient  to  meet  all  their  necessities.  Yet  even  under  these  unfavorable  and 
limited  conditions  of  exchange,  money  has  been  found  a  necessity,  and  has 
come  into  use  in  Corea,  in  some  unknown  manner,  in  the  shape  of  small 
metallic  coinage — nominally  copper,  but  really  a  sort  of  spelter-piece — 500  to 
the  dollar.  With  the  opening  of  the  ports  of  the  country,  a  demand  for  cer- 
tain foreign  products  lias  been  created  ;  and  these,  when  obtained  in  exchange 
for  hides  and  gold-dust,  are  sold  to  the  people  in  quantities  so  small,  that  only 
coins  of  the  value  and  character  mentioned  can  be  conveniently  used  as  media 
of  exchange — kerosene,  for  example,  being  sold  by  the  half-gill,  and  matches 
in  bunches  of  a  dozen. 
12 


254  RECENT  ECONOMIC  CHANGES. 

favor  the  more  extensive  use  of  gold  for  money,  without  at 
the  same  time  displacing  from  their  legitimate  monetary 
spheres  either  copper  or  silver.* 

The  metal  coinage  system  of  the  world  is  not  therefore 
"  mono  -  metallic,"  nor  "  bimetallic,"  but  trimetallic  ;  and 
the  three  metals  in  the  form  of  coin  have  been  used  concur- 
rently throughout  the  world  ever  since  the  historic  period, 
and  in  all  probability  will  always  continue  to  be  so  used ; 
because  by  no  other  system  that  has  yet  been  devised  can 
the  varying  requirements  of  trade  in  respect  to  instrumen- 
talities of  exchange  and  measures  of  value  be  so  perfectly 
satisfied.  And  the  only  change  in  this  situation  of  mone- 
tary affairs  has  been,  that  gradually  and  by  a  process  of  evo- 
lution as  natural  and  inevitable  as  any  occurring  in  the  ani- 
mal or  vegetable  kingdom,  gold  has  come  to  be  recognized 
and  demanded  as  never  before  in  all  countries  of  high  civili- 
zation, as  the  best  instrumentality  for  measuring  values  and 
effecting  exchanges.  It  has  become,  in  the  first  place,  the 
money  of  account  in  the  commercial  world  and  of  all  inter- 
national trade ;  and  any  country  that  proposes  to  find  a  for- 
eign market  for  the  surplus  products  of  its  labor  must  employ 
the  very  best  machinery  of  trade — railroads,  steamships,  tel- 
egraphs, or  money — if  it  does  not  propose  to  place  itself  at  a 
disadvantage. 

In  respect  to  portability,  convenience  for  use,  adaptation 

*  "  When  barter  begins  to  yield  place  to  a  money  system,  gold  is  not  much  in 
request ;  the  payments  are  so  small  as  to  be  best  made  in  silver,  or  in  some 
cheaper  material,  such  as  copper.  At  a  later  stage  silver  is  used,  and  at  a  later 
stage  still,  gold.  The  saturation  point  of  people's  requirements  for  copper  coin 
is  soon  reached ;  in  England,  the  poorest  classes  probably  handle  more  copper 
coins  than  any  other  non-trading  classes.  The  upper  artisan  and  lower  mid- 
dle classes  have  already  reached  saturation  point  with  regard  to  silver ;  and  a 
further  increase  in  their  incomes  would  lead  them  to  handle  more  gold,  but 
not  more  silver.  In  countries  in  which  there  is  not  much  use  of  bank-notes, 
the  amount  of  gold  which  a  non-trading  person  handles  increases  rapidly  with 
his  income,  until  his  payments  become  large  enough  to  be  made  generally  by 
checks.  Then  first  is  the  saturation  point  for  gold  reached." — PROF.  ALFRED 
MARSHALL,  Journal  of  the  Royal  Statistical  Society,  December,  1888. 


LIMITATIONS  TO  THE  USE  OF  SILVER.          255 

to  domestic  and  foreign  business  alike,  the  balance  of  ad- 
vantage for  all  transactions,  above  $25  or  £5,  is  also  largely 
on  the  side  of  gold  considered  as  a  medium  of  exchange ;  as 
will  be  evident  when  it  is  remembered  that  it  required,  even 
before  its  depreciation,  sixteen  times  more  time  to  count  sil- 
ver in  any  considerable  quantity  than  an  equal  value  of 
gold ;  sixteen  times  more  strength  to  handle  it ;  sixteen 
times  more  packages,  casks,  or  capacity  to  hold  it,  and  six- 
teen times  more  expense  to  transport  it.  In  other  words,  in 
this  saving  age,  when  the  possibility  of  extensive  business 
transactions  is  turning  on  profits  reckoned  not  in  cents  but 
in  fractions  of  cents  per  yard,  per  pound,  or  per  bushel,  to 
use  silver  for  large  transactions  in  the  place  of  gold,  is  a 
misapplication  of  at  least  fifteen  sixteenths  of  a  given  unit 
of  eifort,  time,  expense,  and  capacity,  when  one  sixteenth 
would  accomplish  the  same  result. 

The  natural  disinclination  of  a  highly  civilized  com- 
mercial people  requiring  a  large  supply  of  currency  to  meet 
the  wants  of  their  domestic  trade,  to  use  silver  directly  as 
an  instrumentality  for  effecting  exchanges,  is  curiously  illus- 
trated by  the  recent  monetary  experience  of  the  United 
States,  which  after  having  coined  from  1878  to  1888,  inclu- 
sive, 299,424,790  standard  silver  dollars,  was  only  able  at  the 
close  of  the  latter  year  to  report  59,801,350  as  in  actual  cir- 
culation ;  and  249,979,440  in  the  vaults  of  its  treasury.  As 
against  this  latter  sum,  certificates  of  deposit  to  the  amount 
of  $229,783,152  had  been  issued  and  passed  into  circulation 
as  (paper)  currency.  During  eleven  months  of  the  fiscal 
year  1888-'89,  $30,000,000  of  silver  was  coined,  not  one  dol- 
lar of  which  was  added  in  its  metal  form  to  the  money  cir- 
culation of  the  country. 

Another  factor  which  has  without  doubt  powerfully  in- 
fluenced public  opinion  in  countries  of  large  and  active 
domestic  and  foreign  trade  in  favor  of  gold  as  the  sole  mon- 
etary standard  in  preference  to  silver,  has  been  the  advan- 
tage which  gold  seems  to  possess  over  silver  in  the  element 


256  RECENT  ECONOMIC  CHANGES. 

of  stability  of  cost  of  production.  The  amount  of  labor  in- 
volved in  the  mining  or  washing  for  gold  has  remained 
nearly  constant  for  ages ;  while  in  the  case  of  silver  not  only 
are  new  deposits  of  great  richness  continually  being  discov- 
ered, but  many  old  mines  hitherto  unworked  and  unprofit- 
able by  reason  of  inaccessibility,  or  by  the  character  of  their 
ores,  have  been  reopened  and  rendered  profitable  by  im- 
proved facilities  for  transportation  and  cheaper  processes  of 
reduction. 

Now,  it  is  not  asserted  that  it  was  exactly  these  consider- 
ations, as  thus  specified,  that  influenced  Germany  in  1873  to 
take  advantage  of  the  opportunity  afforded  by  the  payment 
of  the  French  war  indemnity*  to  adopt  gold  as  the  standard 
of  her  metallic  coinage  system  —  a  policy  which  France 
would  probably  have  adopted  in  1870,  had  not  war  inter- 
vened— and  that  subsequently  induced  other  countries  to 
follow  the  example  of  Germany.  But  it  can  not  be  doubted 
that  the  motive  in  general  which  prompted  the  action  of 
Germany  in  1873,  and  which  to-day  enrolls  so  many  of  the 
best  of  the  world's  thinkers,  financiers,  and  merchants,  on 
the  side  of  gold  rather  than  that  of  silver  in  the  pending 
and  so-called  bimetallic  controversy,  has  been  and  is  a  con- 
viction that  the  movement  in  favor  of  a  gold  standard,  by 
highly  civilized  and  great  commercial  nations,  is  in  conso- 
nance with  the  spirit  of  the  age ;  that  it  was  a  necessity  for 
the  fullest  development  of  production  and  traffic,  and  the 
same  in  kind  which  prompts  to  the  substitution,  regardless 
of  cost,  of  new  machinery  for  old,  if  even  the  minimum  of 
gain  can  be  thereby  effected  in  the  production  and  distribu- 
tion of  commodities.  It  may,  however,  be  urged  that  grant- 
ing all  that  may  be  claimed  respecting  the  superiority  of 

*  "  It  was  from  this  source  that  Germany  proposed  to  help  herself  before  it 
was  too  late,  and  thereby  array  herself  in  the  rank  of  commercial  states 
which,  having  large  transactions,  chose  gold,  not  merely  as  the  most  stable  in 
value  of  the  two  metals,  but  as  the  best  medium  of  exchange  for  large  pay- 
ments."— PROF.  LAUOHLIN,  History  of  Bimetallism  in  the  United  States,  p.  135. 


THE  SINGLE   VS.  THE  DOUBLE  STANDARD.      257 

gold  over  silver  as  a  standard  of  value  and  a  medium  of  ex- 
change, there  is  not  a  sufficiency  of  gold  to  supply  the  wants 
of  all  who  may  desire  to  avail  themselves  of  its  use  for  such 
purposes ;  and,  therefore,  any  attempt  to  effect  innovations 
in  former  monetary  conditions  would  be  impolitic  because 
likely  to  be  generally  injurious.  But  this  would  not  be  con- 
sidered as  an  argument  of  any  weight  if  pleaded  in  opposi- 
tion to  the  whole  or  partial  disuse  of  any  other  form  of  tool 
or  machine  in  order  that  some  better  tool  or  machine  might 
be  substituted.  That  in  such  a  case  there  would  be  an  ad- 
vantage to  those  who  could  afford  to  have  and  use  the  new, 
and  a  corresponding  disadvantage  to  those  who  could  not, 
may  be  admitted ;  but  what  would  be  the  future  of  the 
world's  progress,  if  the  use  of  all  improvements  was  to  be 
delayed  until  all  to  whom  such  use  would  be  advantageous 
could  start  on  terms  of  equality? 

If,  therefore,  the  above  premises  are  correct ;  if  certain 
of  the  leading  states  of  the  world  have  given  a  preference 
to  gold  over  silver  in  their  trade,  and  have  selected  a  single 
in  place  of  a  former  double  standard  of  value — not  by  rea- 
son of  the  adoption  of  any  abstract  theory  or  desire  for  ex- 
perimentation, but  rather  through  a  determination  to  put 
themselves  in  accord  with  the  new  conditions  of  production 
and  distribution  that  have  been  the  outcome  of  inventions 
and  discoveries  during  the  last  quarter  of  a  century — then 
the  inference  is  warranted  that  all  attempts  to  enforce, 
through  any  international  conference  or  agreement,  any  dif- 
ferent policy  or  practice,  would  be  as  futile  as  to  attempt  to 
displace  through  legislation  railroads  by  stage-coaches  and 
steamships  by  sailing-vessels. 

Finally,  to  comprehend  the  phenomenal  reduction  in  the 
prices  of  the  world's  great  staple  commodities,  which  has 
taken  place  in  recent  years,  it  is  essential  to  look  for  and 
consider  more  potent  and  extensive  causes  than  any  varia- 
tion in  the  volume  or  relative  values  of  the  money  metals, 
great  as  they  may  have  been. 


258  RECENT  ECONOMIC  CHANGES. 

Mechanical  and  chemical  appliances  have  been  invented, 
developed,  and  applied  for  the  production  and  distribution 
of  commodities  within  the  last  quarter  of  a  century,  which, 
prior  to  that  time,  had  hardly  formed  the  subject  of  rational 
speculation.  The  prime  object  of  all  these  inventions  and 
discoveries,  the  great  stimulus  that  led  to  their  realization, 
was  to  cheapen  cost,  or,  what  is  the  same  thing,  reduce 
prices.  And  the  measure  of  the  value  of  any  new  industrial 
method — invention,  discovery,  appliance,  or  development — 
is  the  extent  to  which  these  results  are  effected  by  it.  Thus, 
"  the  prices  of  cloth  fell  when  the  spinning-wheel  and  the 
hand-looms  were  superseded ;  the  price  of  traveling,  when 
steam  superseded  horses  and  the  power  of  wind.  The 
prices  of  all  the  world's  great  staple  commodities  fell  when 
steam  connected  the  chief  sources  of  their  supply  with  the 
market-places  of  all  nations,  and  made  possible  the  wide 
distribution  of  perishable  products.  The  prices  of  all  things, 
again,  fell  pari  passu  with  the  growth  of  financial  institu- 
tions established  to  create  credits  and  economize  the  supply 
and  use  of  metallic  money." 

The  investigations  of  Mr.  Atkinson  show  that,  "  while 
one  half  the  present  effort  to  sustain  life  consists  in  the  effort 
or  cost  of  obtaining  food,  that  effort,  great  as  it  still  is,  is  so 
much  less  than  it  was  prior  to  1860,  as  to  make  it  almost  in- 
capable of  expression  in  specific  terms.  In  1860  the  greater 
part  of  the  wheat  now  consumed  in  Europe  could  not  have 
been  moved  a  hundred  and  fifty  miles  without  exhausting 
its  value;  now  wheat  is  moved  half-way  round  the  world 
at  a  fraction  of  its  value."  The  preservation  of  food  by 
artificial  methods,  which  to  an  extent  is  equivalent  to  its 
increased  supply,  has  also  been  to  a  very  high  degree  per- 
fected. 

In  the  production  of  materials  for  clothing,  vast  areas  of 
new  territory  have  been  added  to  areas  formerly  occupied 
for  the  production  of  cotton  and  wool ;  while,  in  the  case  of 
cotton,  the  change  from  slave  labor  to  free  labor  alone  has 


RELATION  OF  PRICES  TO  GOLD  AND  SILVER.    259 

greatly  reduced  its  cost  of  production  in  that  country  whose 
supply  determines  the  price  for  the  world.  "  In  the  con- 
version of  cotton  and  wool  into  fabrics  it  can  be  proved  that 
one  factory  operative  can  do  four  times  the  work  which  one 
corresponding  operative  could  accomplish  between  the  years 
1840  and  1850 ;  while  the  invention  and  application  of  the 
sewing-machine  has  reduced  the  time  and  labor  cost  neces- 
sary for  the  conversion  of  the  cloth  into  clothing  in  vastly 
greater  measure." 

In  the  case  of  the  useful  metals — iron,  steel,  copper,  lead, 
tin,  and  quicksilver — the  revolution  which  has  occurred  in 
consequence  of  the  discovery  and  opening  of  new  mines,  the 
application  of  new  methods  of  smelting,  and  the  facilities 
for  transportation  at  low  cost,  have  unquestionably  reduced 
the  cost  (price)  of  all  these  products  to  as  great  an  extent  as 
that  of  any  other  class  of  commodities. 

To  suppose,  now,  that  a  change  in  the  relative  value  of 
the  two  precious  metals,  gold  and  silver — a  change  which 
has  not  in  any  degree  restricted  their  natural  supply  or 
diminished  their  monetary  or  industrial  uses — has  exercised 
a  concurrent  superior  and  predominating  influence  in  re- 
spect to  the  prices  of  all  other  commodities  or  services, 
would  seem  to  be  almost  incompatible  with  the  clear  ex- 
ercise of  one's  reasoning  faculties. 


VII. 

Governmental  interference  with  production  and  distribution  as  a  cause  of 
economic  disturbance — Economic  sequences  of  the  repeal  of  the  British 
corn  laws — Extension  of  commercial  freedom — Kesulting  prosperity — 
Reactionary  policy  after  1876 — Causes  influencing  to  reaction — Commercial 
policy  of  Eussia — Illustrations  of  recent  restrictive  commercial  legislation 
— France  and  Italy — French  colonial  policy — Eevival  of  the  restrictive 
commercial  ideas  of  the  middle  ages — Local  and  trade  legislation  in  the 
United  States — Restrictions  on  immigration  and  residence — Retrogression 
in  the  comity  of  nations — Results  of  tariff  conflicts  in  Europe — The  devel- 
opment of  trusts — Indications  of  the  abandonment  of  commercial  restric- 
tions in  Europe — Extraordinary  experiences  of  the  beet-sugar  production 
— International  conference  for  the  abolition  of  sugar  bounties — Experience 
of  France  in  respect  to  shipping  bounties — Relative  commercial  importance 
of  different  European  nations — Per  capita  wealth  in  different  countries — 
Relative  production  and  prices  of  iron  and  steel  in  the  United  States  and 
Great  Britain — Augmentation  of  domestic  prices  by  taxes  on  imports — 
— Economical  disturbances  contingent  on  war  expenditures. 

AN  important  cause  of  economic  disturbance  in  recent 
years  (i.  e.,  since  1873),  and  one  which,  in  the  opinion  of 
the  members  of  the  British  Commission  "  On  the  Depression 
of  Trade  and  Industry  "  (1886),  and  also  of  most  European 
writers,  has  been  largely  instrumental  in  occasioning  uni- 
versal depression  of  business,  has  been  the  increasing  tend- 
ency among  nations  to  favor  and  practically  carry  out  the 
policy  that  the  prosperity  of  their  respective  people  can  be 
best  promoted  by  artificially  stimulating  domestic  industries 
on  the  one  hand,  and  imposing  restrictions  on  international 
commerce  or  the  free  interchange  of  products  with  foreign 
nations  on  the  other. 

After  the  repeal  of  the  "  Corn  Laws  "  by  Great  Britain 
in  1846,  and  the  subsequent  gradual  adandonment  by  that 


EMANCIPATION  OF  TRADE.  261 

nation  of  its  former  illiberal  commercial  policy — followed, 
as  were  these  measures,  by  a  remarkable  development  of 
British  trade  and  industry — the  tendency  of  popular  senti- 
ment and  the  policy  of  governments  throughout  the  civilized 
world  was  unquestionably  in  the  direction  of  emancipating 
international  trade  from  all  arbitrary  restrictions ;  and  be- 
tween 1854  and  1870  the  leading  nations  negotiated  numer- 
ous treaties  for  international  commercial  reciprocity  for  the 
achievement  of  this  object,  and  at  the  same  time  materially 
reduced  their  duties  on  imports.  This  movement  (as  is 
now  almost  forgotten)  first  found  expression  in  the  form  of 
positive  legislation  in  the  United  States,  which  in  1854 
negotiated  a  treaty  which  provided  for  a  free  exchange  of 
nearly  all  crude  materials,  and  mutually  free  fishery  privi- 
leges with  the  British  provinces  of  North  America ;  and,  in 
1857  (by  a  vote  of  33  to  12  in  the  Senate,  and  124  to  71  in 
the  House)  reduced  its  average  duty  on  all  imports  to  less 
than  fifteen  per  cent.  In  fact,  had  not  civil  war  intervened 
in  1861,  the  United  States,  in  a  very  few  years  more,  would 
have  undoubtedly  rivaled  Great  Britain  in  freeing  its  foreign 
trade  and  commerce  from  all  restrictions,  save  for  revenue 
and  sanitary  purposes.*  In  1860,  England,  under  the  lead 
of  Mr.  Cobden,  negotiated  with  the  Emperor  Napoleon  III, 
represented  by  M.  Chevalier,  the  celebrated  commercial 
treaty  with  France,  which,  while  providing  for  large  recipro- 
cal reductions  or  entire  removal  of  many  duties  on  exports 


*  In  1860  a  reduction  of  the  national  revenues,  induced  primarily  by  the 
commercial  panic  of  1857  and  an  increase  of  national  expenditures,  with 
threatened  political  troubles,  led  to  the  introduction  of  a  bill,  avowedly  with 
the  intent  of  restoring  the  tariff  rates  in  force  prior  to  1857  ;  and  this  bill,  with 
amendments,  increasing  the  rates  considerably  beyond  that  point,  became  a 
law  in  March,  1861.  But,  at  that  date,  seven  of  the  Southern  States  had 
seceded,  and  bad  withdrawn  in  great  part  their  Senators  and  Representatives 
from  the  Federal  Congress  ;  so  that  the  action  of  Congress,  at  the  time  of  the 
passage  of  this  bill,  affords  no  indication  of  what  the  legislation  of  the  United 
States  on  the  subject  of  the  tariff  would  have  then  been  had  domestic  tran- 
quillity not  been  interrupted. 


262  RECENT  ECONOMIC  CHANGES. 

as  well  as  imports,  also  entirely  abolished  all  absolute  "  pro- 
hibitions" on  any  branch  of  international  commerce  be- 
tween the  two  nations ;  as,  for  example,  in  respect  to  coal, 
the  exportation  of  which  to  France,  England,  under  a 
fancied  military  necessity,  had  at  one  period  prohibited. 

Following  the  Anglo-French  treaty,  and  as  the  result, 
doubtless,  of  its  influence,  twenty-seven  other  similar  trea- 
ties, providing  for  what  is  called  a  system  of  "  reciprocity," 
were  negotiated ;  in  some  one  or  more  of  which  all  the 
states  of  Europe,  with  the  exception  of  Greece,  participated ; 
Russia  even  breaking  through  her  customary  reserve,  and 
entering  into  more  liberal  commercial  agreements  with  more 
than  one  of  her  neighbors.  And,  as  many  of  these  differ- 
ent treaties  successfully  embodied  new  and  special  relaxa- 
tions in  respect  to  duties  on  imports — which,  in  virtue  of 
the  so-called  "  favored-nation  clause "  *  existing  in  most 
previous  treaties  with  other  countries,  became  also  and  at 
once  generally  applicable — the  area  of  commercial  freedom 
and  its  accruing  benefits  extended  very  rapidly,  and,  as  it 
were,  without  effort,  over  the  greater  part  of  Europe.  So 
that,  by  the  year  1870,  "all  the  great  trading  nations  of 
Europe — England,  France,  the  states  of  the  German  Zoll- 
verein,  Austria,  Italy,  Holland,  and  Belgium — had  become 
one  great  international  body,  by  all  the  members  of  which 
the  principle  of  stipulating  for  exclusive  advantages  for 
their  own  commerce  seemed  to  have  been  abandoned,  and 
not  one  of  whom  could  take  off  a  duty  without  every  other 
member  at  once  enjoying  increased  commercial  facilities; 
while  within  this  body,  the  operation  of  the  favored-nation 
clause  was  such  as  to  make  the  arrival  at  almost  unlimited 
freedom  of  exchange  merely  a  question  of  time."  f 

*  By  the  "  favored-nation  "  clause  is  understood  that  provision  which  has 
been  incorporated  in  most  treaties  in  modern  times,  by  which  the  contracting 
parties  agree  to  give  to  each  other  as  good  treatment  as  each  one,  then  or  there- 
after acting  severally,  may  give  to  other  and  the  most  favored  nations. 

t  Address  of  the  President  (Grant  Duff,  M.  P.)  of  the  Department  of  Econ- 


TRADE  OP  EUROPE,  1860-1873.  263 

Furthermore,  not  only  were  these  same  governments  busy 
during  this  period  in  breaking  down  the  artificial  barriers 
which  they  had  previously  erected  against  international 
trade,  but  they  also  sought,  as  never  before,  to  overcome  the 
natural  impediments  that  had  hitherto  limited  the  extension 
of  their  trade  relations — internal  as  well  as  external — by 
improving  their  highways,  constructing  and  combining  rail- 
ways, and  undertaking  such  stupendous  engineering  opera- 
tions as  the  St.  Gothard  and  Arlberg  Tunnels. 

How  wonderfully  the  trade  of  the  states  of  Europe,  that 
thus  mainly  co-operated  for  promoting  the  freedom  of  ex- 
change, coincidently  developed,  with  an  undoubted  corre- 
sponding increase  in  the  wealth  and  prosperity  of  their 
people,  is  shown  by  the  fact  that  the  European  trade  of  the 
six  nations  of  Austria,  Belgium,  France,  Holland,  Italy,  and 
Great  Britain  increased,  during  the  years  from  1860  to  1873, 
more  than  one  hundred  per  cent,  while  their  aggregate  popu- 
lation during  the  same  period  increased  but  7*8  per  cent.* 
How  much  this  remarkable  increase  of  trade  was  due  to  the 
existence  and  influence  of  the  commercial  treaties  noted,  is 
demonstrated  by  the  further  fact  that  the  increase  of  the 
trade  of  the  above-named  six  nations  during  the  same  period 
with  all  other  countries,  in  which  the  conditions  of  exchange 
had  presumably  not  been  liberalized,  was  at  the  rate  of  only 
sixty-six  per  cent.  It  is  also  interesting  to  note  that  the 
response  made  by  the  Chambers  of  Commerce  and  various 
industrial  bodies  throughout  France  to  an  inquiry  addressed 
to  them  by  the  Government  in  1875,  not  only  testified  to 
the  great  benefit  which  had  accrued  to  French  trade  and 

omy  and  Trade,  at  the  annual  meeting  of  the  British  Association  for  the  Pro- 
motion of  Social  Science,  October,  1875. 

*  The  results  of  the  Anglo-French  treaty  in  the  case  of  France,  as  shown 
by  the  subsequent  rapid  growth  of  French  exports  and  imports,  and  of  national 
savings,  was  akin  to  the  marvelous.  In  fact,  no  higher  evidence  of  the  fiscal 
wisdom  of  the  Emperor  Napoleon  III  in  agreeing  to  this  treaty  could  be  offered, 
than  the  ease  with  which  the  French  people  bore  eleven  years  later  the  huge 
burdens  of  war  indemnities  imposed  on  them  by  Germany. 


264:  RECENT  ECONOMIC  CHANGES. 

industries  by  reason  of  her  commercial  treaties,  but  also  ex- 
pressed an  almost  universal  wish  that  they  might  be  renewed 
upon  their  expiration  upon  even  a  more  liberal  basis ;  and  it 
is  altogether  probable  that  a  similar  response  would  have 
been  made  in  most  of  the  other  countries  in  Europe  had 
like  inquiries  at  the  same  time  been  instituted. 

But,  after  the  continuance  for  some  years  of  the  almost 
universal  depression  of  trade  and  industry  which  commenced 
in  1873,  or  after  the  year  1876,  the  tendency  of  the  govern- 
mental policy  of  the  states  of  Continental  Europe,  and  to  a 
great  extent  also  popular  sentiment,  turned  in  an  opposite 
direction,  or  toward  commercial  illiberality ;  and  now  nearly 
all  of  the  liberal  commercial  treaties  above  referred  to  have 
been  terminated,  or  notice  has  been  given  of  their  non-renew- 
al ;  and,  with  the  exception  of  Great  Britain,  Holland,  Den- 
mark,* and  possibly  China,  there  is  not  a  state  in  the  world 
claiming  civilization  and  maintaining  commerce  to  any  ex- 
tent with  foreign  countries  which  has  not  within  recent 
years  materially  advanced  its  import  or  export  duties. 

Russia  commenced  raising  her  duties  on  imports  in 
1877,  and  has  continued  to  do  so  until  the  Eussian  tariff  at 
the  present  time  is  in  a  great  degree  prohibitory,  and  one  of 
the  highest  ever  enacted  in  modern  times  by  any  nation. 
It  is  also  to  be  noted  that,  whenever  Eussia  extends  its  do- 
minion, laws  are  at  once  promulgated  with  the  undisguised 
purpose  of  greatly  restricting  or  entirely  destroying  any 
commerce  which  the  people  of  the  newly-acquired  territory 
may  have  previously  possessed  with  other  nations. 

Italy  and  Austria-Hungary  entered  upon  their  reaction- 
ary tariff  policy  in  1878 ;  Germany  in  1879 ;  France  in 

*  Denmark  must  be  regarded  as  a  purely  agricultural  country,  possessing 
no  mineral  resources  or  mining  population,  and  very  few  manufactories,  "  and 
while  one  half  of  the  population  live  exclusively  by  agriculture,  the  industries 
and  various  branches  of  general  trade  and  commerce  afford  occupation  to  less 
than  one  fourth  of  the  whole  number." — Testimony  of  the  British  Commission 
on  the  Depression  of  Trade  and  Industry. 


RESTRICTIVE  COMMERCIAL  LEGISLATION.        265 

1881 ;  Switzerland  in  1885 ;  the  Dominion  of  Canada  in 
1879  and  1887 ;  Koumania  in  1886 ;  Belgium  and  Brazil  in 
1887 ;  while  in  the  United  States,  owing  to  the  decline  in 
the  prices  of  goods  subject  to  specific  duties,  the  average 
ad  valorem  rate  of  duty  on  dutiable  merchandise  has  ad- 
vanced from  41-61  per  cent  in  1884  to  47-10  per  cent  in 
1887.  In  Spain,  which  quadrupled  her  foreign  commerce 
under  a  very  liberal  commercial  policy  adopted  in  1869,  the 
restrictions  on  trade  have  since  become  so  excessive  that 
the  only  relief  opened  to  the  consumer  is  by  alliance  with 
the  contrabandist,  whose  profession  is  becoming  almost  as 
well  established  in  Spain,  France,  and  Italy,  as  in  the  mid- 
dle ages,  when  but  for  him,  according  to  Blanqui,  com- 
merce would  have  well-nigh  perished.  In  Holland,  which 
has  hitherto  resisted  all  demands  for  increased  restrictions 
on  her  foreign  commerce,  an  association  of  manufacturers 
petitioned  the  Government  in  May,  1887,  in  favor  of  speedy 
legislation  on  the  tariff,  for  the  purpose  of  protection  to 
home  industries,  and  set  forth  the  following  as  reasons  for 
their  request : 

"  The  national  industry  lives  in  a  most  difficult  time.  It  seems 
that  the  last  period  of  the  battle  of  life  has  appeared  for  many  of  its 
branches.  Foreign  competition,  steeled  by  protection,  equipped  and 
encouraged  to  a  decisive  battle  for  the  overpowering  of  a  market  for 
the  world,  even  appears  to  drive  aside  the  most  natural  protections  of 
native  industry.  Now  flour  has  its  turn ;  next,  cattle  and  meat.  In 
other  words,  the  aim  of  adjacent  and  more  distant  countries  appears 
daily  more  openly.  The  industry  of  the  Netherlands  is  menaced  with 
a  total  ruin  by  their  oppression." 

And,  as  further  illustrations  of  the  degree  to  which  a 
restrictive  commercial  policy  is  favored,  and  the  extremes 
to  which  it  is  practically  carried,  it  may  be  mentioned  that 
some  of  the  small  British  islands  of  the  West  Indies  (Trini- 
dad and  St.  Vincent,  for  example)  maintain  duties  in  a  high 
degree  restrictive  cf  the  interchange  of  their  comparatively 
small  products ;  while  Venezuela,  in  1886,  when  new  and 


266  RECENT  ECONOMIC  CHANGES. 

prospectively  rich  alluvial  deposits  of  gold  were  discovered 
within  her  territory,  at  once  imposed  a  duty  on  her  exports 
of  "raw  gold." 

During  the  past  year  (1888)  the  Manchester  (England) 
Chamber  of  Commerce  passed  a  resolution  to  the  effect 
that — 

"All  goods  of  a  nature  and  kind  which  we  ourselves  produce, 
offered  in  the  markets  of  the  United  Kingdom,  should  pay  that  equal 
proportional  share  of  the  burden  of  imperial  and  local  taxation  which 
they  would  have  paid  if  produced  or  manufactured  in  the  United 
Kingdom." 

Commenting  upon  the  evidence  thus  afforded  of  a 
change  in  even  British  commercial  sentiments — i.  e.,  from 
liberality,  foresight,  and  boldness,  to  illiberality,  narrow- 
mindedness,  and  timidity — the  London  "  Economist "  has 
thus  significantly  written :  "  The  time  was  when  the  men 
of  Manchester  were  characterized  by  a  spirit  of  sturdy  self- 
reliance,  and  asked  nothing  better  than  that  they  should  be 
left  free  to  fight  their  own  industrial  battles ;  but,  if  their 
Chamber  of  Commerce  is  to  be  regarded  as  a  truly  repre- 
sentative institution,  they  must  have  sadly  deteriorated. 
Now  they  seem  to  live  in  perpetual  fear  of  their  foreign 
competitors,  and  a  project  has  only  to  be  presented  to  them 
in  the  guise  of  a  blow  to  be  struck  against  their  dreaded 
rivals  to  insure  its  ready  acceptance  by  them.  The  question 
with  them  is  no  longer  '  What  can  we  do  to  help  ourselves  ? ' 
but  *  What  can  we  do  to  injure  our  competitors  ? '  and 
whether  the  injury  is  to  be  inflicted  upon  foreigners  or 
upon  our  fellow-subjects  in  India  appears  to  be  a  matter  of 
perfect  indifference."* 

*  The  utter  folly  and  disastrous  consequences  of  the  adoption  by  Great 
Britain,  or  other  nations,  of  such,  a  principle  of  fiscal  policy  as  has  been  in- 
dorsed by  the  Manchester  Chamber  of  Commerce  is  also  thus  demonstrated  by 
the  "  Economist"  :  "  Suppose,"  it  says,  "  the  men  of  Manchester  to  have  their 
own  way,  and  the  people  of  the  United  Kingdom  were  to  levy  an  import  duty 


THE  NEW  MANCHESTER  POLICY.  £67 

To  many,  doubtless,  these  economic  phenomena  do  not 
appear  to  admit  of  any  ready  and  satisfactory  explanation ; 
while  others  will  unhesitatingly  ascribe  them  to  the  influ- 
ence and  acceptation  of  protectionist  theories  and  teach- 
ings, inculcated  under  the  advantageous  but  specious  cir- 
cumstance, that  the  almost  universal  depression  of  trade  and 
industry  that  has  prevailed  since  1873  commenced  at  a  time 
when  the  general  commerce  of  the  world  was  absolutely 
more  free  from  artificial  restrictions  than  at  any  former 
period  of  its  history. 

The  factors  that  have  been  concerned  in  effecting  these 

upon  cotton  goods  entering  this  country,  we  could  not  refuse  to  allow  India 
to  follow  our  example,  and  tax  the  cotton  manufactures  she  receives  from  us, 
BO  that,  to  use  .the  words  of  the  Manchester  fair-traders,  they  '  should  pay 
that  equal  and  proportional  share  of  the  burden  of  imperial  and  local  taxation 
which  they  would  have  paid  if  produced  or  manufactured'  in  India.  No 
doubt,  if  it  be  the  wish  of  Manchester  that  India  should  act  upon  this  prin- 
ciple, she  will  be  only  too  pleased  to  comply  with  it.  She  parted  reluctantly 
with  her  cotton  duties,  and  is  ready  to  reimpose  them  at  once,  should  the 
home  Government  desire  it.  But  what  a  sorry  figure  do  the  Manchester 
manufacturers  present !  They  are  apparently  in  an  agony  of  apprehension 
because  we  import  cotton  manufactures  of  all  kinds,  to  the  value  of  less  than 
£2,000,000  a  year,  and  in  order  to  put  impediments  in  the  way  of  those  im- 
ports they  are  ready  to  indorse  a  system  of  protection  which,  in  the  case  of 
India  alone,  would  subject  to  taxation  between  £19,000,000  and  £20,000,000 
of  their  own  manufactures,  which  now  enter  India  every  year  free  of  duty. 
Is  it  possible  to  imagine  any  proposal  more  suicidal  than  this  ?  And  there  is 
another  point  that  the  fair-traders  have  entirely  overlooked.  If  there  is  to  be 
a  war  of  tariffs,  it  need  not  necessarily  be  a  war  of  import  tariffs  alone.  On 
the  principle  that  a  nation  is  bound  to  see  that  all  who  trade  with  it  contrib- 
ute as  much  to  its  taxation  as  its  own  inhabitants,  India  and  the  United  States 
would  obviously  be  justified  in  imposing  an  export  duty  upon  all  the  raw 
cotton  they  send  here.  If  that  cotton  were  retained  at  home,  and  manufact- 
ured there,  it  would,  in  the  process  of  manufacture,  contribute  to  the  revenue, 
since  the  manufacturers  pay  both  State  and  local  taxes.  Why,  then,  if  the 
new  Manchester  doctrine  be  sound,  should  not  an  export  duty  be  levied  upon 
it  equal  to  the  amount  of  taxation  that  would  have  been  derived  from  it  if  it 
had  been  kept  and  worked  up  at  home?  It  is  no  answer  to  this  to  say  that 
export  duties  are  restrictive  trade.  So  are  import  duties ;  and  if  Manchester 
imagines  that  it  can  by  means  of  fiscal  arrangements  strike  at  its  foreign  com- 
petitors without  receiving  tenfold  heavier  blows  in  return  it  is  vastly  mis- 
taken." 


268  BECENT  ECONOMIC  CHANGES. 

economic  changes  and  accompanying  disturbances  are  not, 
however,  simple,  but  somewhat  numerous  and  complex. 
They,  nevertheless,  admit,  it  is  believed,  of  clear  recognition 
and  statement.  In  the  first  place,  the  results  of  the  Franco- 
German  War — the  radical  changes  in  the  character  and  con- 
struction of  war-armaments  since  that  period,  and  the  con- 
tinual augmentation  of  permanent  military  forces,  have 
entailed  upon  all  the  states  of  Europe  since  1873  continually 
increasing  expenditures  and  indebtedness ;  and  indirect  tax- 
ation, by  means  of  duties  on  imports,  to  meet  these  increas- 
ing financial  burdens,  has  been  found  to  be  most  in  accord 
with  the  maxim  attributed  to  Colbert,  that  the  perfection 
of  taxation  consists  in  so  plucking  the  goose — i.  e.,  the  people 
— as  to  procure  the  greatest  amount  of  feathers  with  the 
least  possible  amount  of  squawking. 

Again,  with  the  introduction  and  use  of  new,  more  ef- 
fective, and  cheaper  methods  or  instrumentalities  of  pro- 
duction, every  nation  of  advanced  civilization  has  experi- 
enced, in  a  greater  or  less  degree,  an  increase  in  the  product 
of  nearly  all  its  industries  save  those  which  are  essentially 
handicraft  in  character,  with  not  only  no  corresponding  in- 
crease, but  often  an  actual  decrease  in  the  number  of  labor- 
ers to  whom  regular  and  fairly  remunerative  employment 
constitutes  the  only  means  of  obtaining  an  independent  and 
comfortable  livelihood.  Every  country  with  accumulating 
productions  has  accordingly  felt  the  necessity  of  disposing 
of  its  surplus  by  exporting  it  to  the  markets  most  freely 
open  to  it ;  and,  as  a  consequence,  that  has  happened  which 
might  have  been  expected  could  the  exact  course  of  events 
have  been  anticipated,  namely :  increased  competition  in 
every  home  market,  engendered  by  increasing  domestic  pro- 
duction and  the  efforts  of  foreign  producers  to  export  (in- 
troduce) their  surplus ;  fiercer  competition  to  effect  sales  of 
the  excess  of  competitive  products  by  the  sellers  of  all  na- 
tions in  neutral  markets ;  and  an  almost  irresistible  tendency 
toward  a  universal  depression  of  prices  and  profits,  and,  to 


SUNDAY  LABOR.  269 

a  greater  or  less  extent,  a  displacement  of  labor.  It  is  also 
to  be  noted  that  as  the  capacity  for  industrial  production 
increases,  and  competition  to  effect  sales  becomes  fiercer, 
the  more  feverish  is  the  anxiety  to  meet  competition — spe- 
cially on  the  part  of  foreign  rivals — by  producing  cheaper 
goods;  and  that  this  policy  in  the  states  of  Continental 
Europe,  and  more  particularly  in  Germany,  is  antagonizing 
efforts  to  shorten  the  hours  of  labor  and  restrict  the  factory 
employment  of  women  and  children ;  and  is  also  tending  in 
a  marked  degree  to  do  away  with  the  heretofore  general 
practice  of  suspending  labor  on  Sundays.* 

*  The  results  of  an  extensive  inquiry,  recently  instituted  by  the  British 
Government,  in  respect  to  Sunday  labor  in  Germany  (and  comprising  with  the 
evidence  taken  three  large  volumes),  shows  that  in  Westphalia,  Khineland, 
Wiirtemberg,  Baden,  Alsace,  and  Brunswick,  Sunday  work  is  only  enforced 
where  necessary.  Different  reports  come,  however,  from  Saxony,  one  stating 
that,  "  Sunday  labor  has  become  usual  in  most  factories  and  workshops  solely 
under  the  stress  of  competition,  so  that  the  hours  of  divine  service  are  now 
alone  excluded,  and  these  only  from  absolute  necessity."  Another  report 
says  that  Sunday  labor  has  become  "  a  principle  with  many  employers," 
while  in  a  number  of  cases  the  journeyman  or  operative  seeking  an  engage- 
ment must  bind  himself  to  work  on  Sunday,  and  "if  the  workman  refused  to 
work  on  Sunday,  reprisals  on  the  part  of  the  employer  would  be  the  inevita- 
ble result,  and  this  is  so,  even  in  spite  of  the  legal  restriction  of  work  on  Sun- 
days and  festivals."  u  On  the  whole,"  says  the  London  "  Economist,"  "  the 
evidence  "  (presented  in  the  published  report  of  the  Government  inquiry)  "  is 
unfavorable  to  the  principle  of  Sunday  labor,  though  it  is  largely  carried  on — 
in  all  probability  more  so  than  is  admitted,  for  in  innumerable  cases  it  is  ad- 
mitted that  it  is  hard  to  get  at  the  real  state  of  affairs.  Nevertheless,  there  is 
general  disinclination  against  putting  the  principle  of  no  Sunday  work  into 
practice  where  the  objectionable  system  has  obtained  a  footing.  On  the  part 
of  large  industrial  concerns,  it  is  said  that  want  of  continuity  would  often  be 
&  cause  of  serioua  loss,  while  without  Sunday  labor  repairs  could  never  be 
carried  out,  even  night-work  being  no  adequate  substitute.  The  number  of 
associations  which  recommend  the  absolute  prohibition  of  Sunday  labor  is 
small  in  proportion  to  those  which  advocate  partial  prohibition.  The  ques- 
tion of  Sunday  labor  is  one  of  considerable  interest  for  England,  for  it  is 
unquestionable  that,  among  the  causes  of  Germany's  ability  to  compete 
with  England  as  a  mercantile  and  industrial  country,  the  fact  that  here 
more  hours  are  worked  for  less  money  is  not  the  least  important.  The 
prohibition  of  Sunday  labor  would,  of  course,  mean  increased  cost  of  produc- 
tion ;  and  every  increase  in  the  cost  of  production  will  render  it  more  difficult 


270  RECENT  ECONOMIC  CHANGES. 

To  meet  this  condition  or  tendency  of  affairs,  two  lines 
of  policy  have  commended  themselves  to  the  governments 
of  many  countries — especially  in  Continental  Europe — as 
remedial  and  easy  of  execution,  namely ;  to  seek  to  diversify 
and  increase  the  home  demand  for  the  products  of  domestic 
industry  on  the  one  hand,  and  to  obtain  new  and  larger 
markets  in  foreign  countries  for  their  surplus  productions 
on  the  other.  And  the  first  of  these  results  it  has  been 
sought  to  accomplish  by  restricting  or  prohibiting,  through 
import  (tariff)  duties,  the  importation  and  competitive  sale 
in  their  respective  markets  of  the  surplus  products  of  other 
nations ;  and  the  second,  by  offering  bounties  on  exports,  or 
on  the  construction  and  multiplied  use  of  vessels  for  em- 
ployment in  foreign  commerce.  In  the  pressing  necessity 
for  finding  new  and  (if  possible)  exclusive  markets  for  in- 
creasing machinery  products,  and  for  commodities  whose 
production  has  been  artificially  stimulated,  is  undoubtedly 
also  to  be  found  the  clew  to  the  policy  which  within  recent 
years  has  mainly  prompted  Germany,  France,  Belgium, 
Italy,  and  Spain  to  seek  to  obtain  new  territorial  possessions 
in  Eastern  and  Central  Africa,  Southeastern  Asia,  and  in 
New  Guinea  and  other  islands  of  Polynesia. 

The  commercial  policy  of  Russia  under  such  circum- 
stances must,  however,  be  regarded  as  wholly  exceptional, 
and  that  of  the  United  States  as  partially  so.  In  the  case 
of  the  former,  her  recent  increased  restrictions  on  foreign 
commerce,  through  greatly  increased  duties*  on  imports, 
have  not,  apparently,  been  due  to  the  acceptance  of  any  eco- 
nomic theory  in  respect  to  trade,  or  with  any  reasonable 
expectations  that  an  extensive  prohibition  of  imports  could 
permanently  add  to  her  revenues  from  customs,  but  rather 
because  such  action  is  an  essential  part  of  what  seems  to  be 
a  larger  and  fully  accepted  national  policy,  which  aims  to 


for  Germany  to  outrival  older  manufacturing  countries  in  the  markets  of  the 
world." 


COMMERCIAL  POLICY  OF  AUSTRIA.  271 

banish  and  exclude  from  the  empire  everything  foreign  in 
its  nature  and  origin* — persons,  merchandise,  language, 
literature,  immigration,  and  religion ;  while  in  the  case  of 
the  latter  the  fiscal  policy  of  the  country  for  now  more  than 
a  quarter  of  a  century  has  been  based  upon  the  idea  that 
foreign  trade  is  injurious,  and  therefore  importations,  with- 
out which  there  can  be  no  exportations,  should  be  pre- 
vented. 

Leaving  Kussia  out  of  account,  the  nation  that  took  the 
initiative  in  breaking  in  upon  the  system  of  comparatively 
free  international  exchanges  that  had  gradually  come  to 
prevail  among  the  commercial  nations  of  Europe  since  1860, 
was  Austria- Hungary,  which,  feeling  the  necessity  of  secur- 
ing larger  markets  for  her  manufactured  products,  increased 
her  tariff  in  1878,  with  the  avowed  expectation  of  obtaining, 
through  new  negotiations,  greater  commercial  advantages 
or  concessions,  more  especially  from  Germany,  than  were 
enjoyed  under  existing  treaties.  A  similar  policy  also  found 
favor  at  about  the  same  time  in  France,  and  under  its  influ- 
ence the  "Anglo-French"  and  other  commercial  treaties 
were  either  allowed  to  lapse  or  were  "  denounced,"  and  a 
new  general  tariff  was  constructed.  The  result  was  not 
what  was  probably  anticipated.  Increased  restrictions  on 
imports  on  the  part  of  Austria,  in  place  of  inviting  conces- 
sions, led  at  once  to  retaliatory  tariffs  by  Italy  and  Germany, 
and  the  example  thus  set  has  been  followed  by  one  European 
Continental  state  after  another,  each  raising  barrier  after 
barrier  against  the  competition  of  other  nations,  until  all 
stability  of  duties  on  the  numerous  frontiers  has  practically 
ended,  baffling  the  calculations  alike  of  exporters  and  im- 
porters, and  making  the  development  of  almost  every  trade 
and  industry  dependent  on  bounties,  subsidies,  and  restric- 

*  By  a  ukase  issued  in  May,  1888,  no  foreigner  thereafter  is  allowed  to  be- 
come or  to  remain  a  landed  proprietor  in  Russia,  a  measure  that  was  practi- 
cally equivalent  to  the  expulsion  of  a  large  number  of  Germans  engaged  in 
manufacturing  or  mining  in  Russia. 


272  RECENT  ECONOMIC  CHANGES.' 

tions  on  exchanges,  rather  than  on  their  own  inherent 
strength  and  enterprise. 

The  following  examples  are  illustrative  of  recent  pro- 
cedures in  continuation  of  this  policy :  In  1885  Germany 
deliberately  excluded  Belgian  linen  from  her  markets. 
This  act  has  not  as  yet  been  followed  by  reprisals  by  Bel- 
gium ;  but  the  action  of  Germany,  in  repeatedly  augmenting 
in  recent  years  her  duties  on  breadstuffs  has  been  promptly 
imitated  by  Austria-Hungary,  whose  export  of  cereals  was 
seriously  affected.  But,  notwithstanding  these  increased 
duties  on  the  movements  of  grain  between  Germany  and 
Austria,  the  prices  of  cereals  in  both  of  these  countries  have 
since  continually  receded,  and  the  enactment  of  similar  im- 
posts in  France  has  been  followed  by  a  like  experience. 
Belgium,  which  for  many  years  has  been  the  typical  free- 
trade  state  of  the  world,  and  which  in  1885,  by  her  Chamber 
of  Deputies,  refused  to  entertain  a  proposition  to  restrict 
the  importation  of  cattle  into  the  country,  has  since  then, 
and  mainly  by  a  recognition  of  an  inability  to  compete  with 
the  prices  established  for  meats  and  grain  by  the  United 
States  and  other  foreign  countries,  felt  compelled  to  impose 
high  duties  on  the  importation  of  all  live-stock  and  dead 
meats — fresh,  smoked,  or  salted.  A  new  tariff,  embodying 
the  extreme  protective  principle  recently  adopted  by  Brazil, 
imposes1  high  and  almost  prohibitory  duties  on  the  importa- 
tions of  rice  and  all  other  cereals  produced  in  the  country, 
and,  as  Brazil  has  heretofore  imported  annually  some  two 
hundred  thousand  sacks  of  rice  from  foreign  countries,  the 
disturbance  of  trade  in  this  particular  is  likely  to  be  serious. 

The  United  States  having  imposed  heavy  duties  on  the 
importations  of  French  wines  and  silks,  France  improves  on 
the  precedent  thus  established,  and  excludes  by  relatively 
higher  duties  the  importation  into  her  territories  of  Ameri- 
can pork.* 

*  Under  discriminating  restrictive  legislation  on  the  part  of  France  and 


TARIFF  CONFLICTS  OF  FRANCE  AND  ITALY.    273 

In  Sweden  and  Norway,  on  the  other  hand,  where,  dur- 
ing the  year  1887,  an  effort  was  made  under  similar  circum- 
stances to  restrict  by  increased  duties  the  entry  of  foreign 
flour  and  other  breadstuffs,  the  proposition  was  signally  de- 
feated by  the  return  of  a  large  adverse  majority  to  the  lower 
house  of  the  Swedish  Kiksdag. 

On  the  1st  of  January,  1888,  a  treaty  of  commercial  re- 
ciprocity between  France  and  Italy,  negotiated  in  1881,  was 
terminated  by  original  stipulation.  So  far  from  being  re- 
newed, a  renewal  was  not  only  not  seriously  contemplated, 
but  the  expiration  of  the  treaty  was  really  regarded  with 
feelings  of  unmixed  satisfaction  by  many  persons  in  both 
countries,  by  reason  of  the  opportunity  that  would  be 
afforded  for  mutually  increasing  the  duties  on  their  respect- 
ive importations.  And  in  this  spirit  each  government  has 
successively  enacted  special  tariffs,  all  more  or  less  retalia- 
tory in  spirit  and  destructive  of  international  trade.  For 
example,  under  the  treaty  the  light,  cheap  wines  of  Italy 
were  admitted  into  France  at  a  mere  nominal  rate  of  duty, 
and  were  imported  in  large  quantities  to  supply  the  deficit 
in  the  wine  production  of  France  occasioned  by  the  ravages 
of  the  phylloxera,  while  the  more  valuable  French  wines 
were  admitted  on  correspondingly  favorable  terms  into  Italy, 
and  obtained  an  increased  consumption.  On  the  expiration 
of  the  treaty  each  government  advanced  its  duties  on  wines 
to  prohibitory  rates,  while  on  most  other  merchandise  the 
respective  increase  in  rates  was  from  fifty  to  one  hundred 
per  cent.  One  of  the  first  acts  of  the  French  Government 
after  the  expiration  of  the  treaty  was  the  promulgation  of 
a  decree  absolutely  prohibiting  the  future  importation  of 
"  plants,  flowers,  cut  or  in  pots,  of  fruits,  fresh  vegetables,  and, 
in  general,  of  all  horticultural  and  market-garden  produce 
of  Italian  origin";  chestnuts  without  their  shells  excepted. 

Germany,  the  export  of  American  hog-products  has  diminished  in  value  from 
$104,000,000  in  1881  to  $59,000,000  in  1888. 


2T4  RECENT  ECONOMIC  CHANGES. 

How  Italy  retaliates  for  such  proceedings  is  illustrated 
by  the  circumstance  that  the  Italian  custom-house  recently 
levied  fourteen  pounds  import  duty  on  a  dead  body  sent 
from  France  to  Milan  for  cremation,  and  the  same  amount 
as  export  duty  on  the  ashes  as  they  were  carried  back 
into  France.  Again,  the  new  customs  duties  and  regula- 
tions of  Italy  having  proved  oppressive  to  French  trade, 
France  has  retaliated  by  the  withdrawal  of  all  the  privileges 
formerly  granted  to  the  Italians  in  respect  to  fishing,  coast- 
ing-trade, and  port  dues  on  her  Mediterranean  coasts,  in- 
cluding Algeria.  The  result  of  this  war  of  tariffs  has  been 
exactly  what  might  have  been  anticipated.  Both  countries 
have  suffered  severely  from  the  restriction  of  trade  thus  arti- 
ficially produced ;  but  it  is  a  matter  of  comment  that  a  cer- 
tain satisfaction  is  manifested  by  the  French  that  the  Ital- 
ians have  suffered  more  than  themselves,  as  it  is  conceded 
that  the  exports  from  Italy  to  France  have  fallen  in  a  far 
greater  proportion  than  the  exports  from  France  to  Italy, 
entailing  a  very  considerable  reduction  in  the  customs  rev- 
enue of  the  latter  country.*  Smuggling  from  one  country 

*  A  comparison  of  the  exports  from  Italy  to  France  for  the  first  five  months 
of  1887  under  the  treaty,  with  the  first  five  months  of  1888  after  its  abrogation, 
showed  the  following  diminutions  of  commodities :  24,000  casks  and  695,000 
bottles  of  wine ;  cattle  to  the  value  of  about  8,000,000  francs ;  cereals  to  the 
value  of  16,000,000  francs. 

"  Thus  far  the  effects  of  the  blockade  seem  to  have  fallen  more  severely 
upon  Italy  than  France.  In  the  former  country  there  is  a  dearth  of  capital 
which  paralyzes  commercial  enterprise,  and  the  farmers  are,  in  general,  poorer 
and  more  dependent  than  the  French  upon  the  immediate  sale  of  each  year's 
vintage.  In  southern  Italy  the  distress  is  already  acute.  Money  is  so  scarce 
as  to  be  almost  unobtainable  by  people  of  moderate  means,  and  many  peasant 
proprietors  with  mortgages  on  their  property  have  been  forced  to  make  ruin- 
ous sacrifices.  The  market  values  of  ordinary  wines  have  fallen  as  low  as 
four,  eight,  and  tea  cents  per  gallon,  and  all  collateral  interests,  including 
cooperage  and  the  traffic  in  staves,  are  correspondingly  depressed.  The  crisis 
was  precipitated  at  a  time  when  native  ordinary  wines  were  abundant  and 
cheap  in  France,  not  so  much  by  reason  of  a  profuse  vintage  last  year,  as  be- 
cause the  working-classes  have  learned  to  consume  the  'piquettes,'  or  arti- 
ficial wines  made  from  dried  grapes  imported  from  the  Levant.  As  the  wine 


REVIVAL  OF  SMUGGLING.  275 

to  the  other  prevails  to  a  large  extent ;  but  France  feels  the 
disturbance  from  this  cause  less  than  Italy,  because  French 
goods,  being,  as  a  rule,  compact  and  of  greater  value  in  equal 
compass  than  the  average  of  Italian  products,  are  more  easily 
passed  through  third  countries  or  smuggled  across  the  front- 
iers. At  the  same  time  it  is  certain  that  French  trade 
with  Italy  has  also  suffered  severely ;  the  export  of  many 
articles  of  French  produce,  like  silk-piece  goods,  silk-trim- 
mings, cotton  fabrics,  paper-hangings,  and  the  like,  having 
declined  from  thirty  to  seventy-five  per  cent.  And  yet,  not- 
withstanding these  experiences,  all  negotiations  for  the  re- 
newal of  a  commercial  treaty  between  the  two  nations  have 
thus  far  led  to  no  results,  and  political  events  and  influences 
have  constantly  tended  to  make  affairs  worse,  instead  of 
better. 

The  purchase  of  horses  by  the  Germans  in  the  north- 
eastern departments  of  France  is  regarded  in  France  as  an 
evil  only  to  be  met  by  enactments  prohibiting  the  export  of 
horses ;  and  the  cattle-dealers  of  Bordeaux  and  La  Vendee 
accuse  the  British  Government  of  underhand  "  protection  " 
by  orders  in  Council  alleging  cattle-plague  to  exist  in  the 
west  of  France,  and  putting  restrictions  upon  the  landing 
of  French  beasts. 

In  1880,  under  a  plea  that  French  industry  was  bur- 
dened by  high  rates  of  inland  transportation,  and  thus  ren- 
dered less  able  to  meet  foreign  competition,  all  taxation  on 
the  transportation  of  goods  by  the  water-ways  of  France—- 
export to  Italy  had  been  previously  confined  mainly  to  champagne,  Burcnlndy, 
and  Bordeaux  wines  of  high  quality,  the  blockade  has  not  sensibly  affected 
the  French  wine  growers  or  dealers.  France  has  a  steady  and  well-estab- 
lished export  demand  for  her  wines,  which  Italy  has  not ;  but  if  the  present 
restrictions  are  to  be  permanently  maintained,  no  one  can  doubt  that  the  Ital- 
ians, by  perfecting  their  manufacture,  will  eventually  produce  large  quantities 
of  wines  which  will  bear  exportation,  and  seriously  encroach  upon  a  trade 
with  Russia,  England,  the  Netherlands,  and  the  United  States,  over  which 
France  has  hitherto  held  entire  control." — Report  to  the  United  Slates  Depart- 
ment of  State  by  Consul  MASON,  of  Marseilles,  1888. 


276  RECENT  ECONOMIC  CHANGES. 

rivers  and  canals — was  abolished.  But  a  movement  has  re- 
cently been  started  to  re-establish  this  tax,  on  the  ground 
that  the  facilities  offered  by  the  free  use — so  far  as  taxation 
is  concerned — of  the  rivers  and  canals  of  France,  favor  for- 
eign competition,  by  permitting  English,  German,  and  Bel- 
gian coal  to  reach  the  interior  of  France ;  the  cheap  transport 
destroying  the  effect  of  the  import  duty  enacted  for  the 
protection  of  French  coal. 

With  the  establishment  of  French  sovereignty  over  that 
large  area  of  the  earth's  surface  known  as  "  Indo-China," 
the  markets  of  that  country  have  been  practically  closed  to 
the  manufactured  products  of  all  other  countries  except 
France.  While  the  people  of  India  under  English  rule  may 
buy  freely  the  cotton-stuffs,  hardware,  and  other  articles 
they  require  in  France,  Germany,  Switzerland,  and  the 
United  States,  as  well  as  in  England,  without  being  com- 
pelled to  pay  any  tribute  to  the  English  manufacturers  in 
the  form  of  differential  duties,  the  French  still  cling  to  the 
old  colonial  system  of  the  sixteenth  and  seventeenth  centu- 
ries, according  to  which  it  is  the  duty  of  the  colonies  to 
exclusively  purchase  and  consume  the  products  of  the 
mother-country;  and  have  endeavored  to  force,  so  far  as 
possible,  the  Indo-Chinese  to  purchase  in  the  French  mar- 
ket, and  pay,  in  addition  to  the  Government  taxes,  an  indus- 
trial tax,  equal  to  the  difference  between  the  price  and 
quality  of  the  French-protected  articles  and  those  of  com- 
peting countries.  Thus,  before  the  advent  of  the  French, 
the  wretchedly  poor  population  of  Indo-China  were  accus- 
tomed to  clothe  themselves  mainly  with  a  thin  calico,  made 
in  China,  called  "  etamine"  which  was  brought  into  the 
country  as  an  article  for  exchange,  with  little  or  no  restric- 
tions ;  but  under  the  French  rule  a  prohibitive  duty  of 
about  fifty  per  cent  of  the  value  of  etamine  has  been  imposed 
on  its  importation ;  and  as  every  tax  is  eventually  paid  by 
labor,  the  Indo-Chinese  are  thus  obliged  to  work  an  hour 
or  two  longer  every  day  to  clothe  themselves.  It  is  also 


AN  EXTRAORDINARY  EXPERIENCE.  277 

worthy  of  note  that,  since  the  application  of  this  system,  in 
September,  1887,  the  importations  into  Indo-China  are  re- 
ported as  having  diminished  to  the  extent  of  forty-five  per 
cent,  and  that  the  aggregate  trade  of  the  country  has  also 
been  greatly  impaired.* 

The  imposition  for  some  time  past  of  excessive  discrimi- 
nating duties  by  Koumania  on  importations  from  Austria — 
a  duty,  for  example,  of  six  hundred  francs  being  levied  on 
a  double  cwt.  of  shoes — has  given  rise  to  one  of  the  most 
extraordinary  proceedings  in  commercial  history.  To  avoid 
these  high  duties,  the  Austrian  manufacturers  have  adopted 
the  plan  of  sending  their  goods,  in  the  first  instance,  "  to 
Switzerland  or  Holland,  where  in  a  frontier  custom-house 
they  pay  a  duty  which  naturalizes  them,  so  that  they  become 
Swiss  or  Dutch  products,  and  as  such  they  are  then  forwarded 
to  Roumania.  The  enormous  cost  of  the  long  railway  jour- 
ney, the  duty  in  Switzerland  or  Holland,  and  the  duty  at  the 
Roumanian  frontier,  do  not  together  amount  to  so  much  as 
the  duty  demanded  of  Austrian  goods  imported  directly  by 
the  Roumanians."  The  Roumanian  Government  has,  there- 
fore, failed  to  a  great  extent  in  its  plan  of  excluding  Austrian 
products  from  its  territory,  and  its  people  have  had  to  pay 
the  high  duties  imposed  upon  their  importations.  Rouma- 
nia has,  furthermore,  found  it  impossible  to  protest  against 
this  scheme  by  which  Austrian  manufactures  have  been  im- 
ported, because  it  is  perfectly  fair,  and  the  arrangements 
for  carrying  it  out  are  made  in  such  correct  form,  that  the 
countries  whence  the  goods  are  imported  could  not  suffer 
them  to  be  rejected  at  the  Roumanian  frontier.  Under  such 


*  In  a  recent  debate  in  the  French  Chamber  of  Deputies,  a  Rouen  cotton- 
spinner  defended  the  customs  policy  of  France  in  respect  to  Cochin-China, 
and  attributed  the  distress  and  decline  of  trade  in  that  country  to  the  failure  of 
its  rice-crop  and  the  depreciation  of  silver.  He  argued  that  the  effects  of  the 
policy  adopted  by  France  had  been  satisfactory,  as  the  value  of  the  exports  of 
cotton  goods  from  the  Rouen  district  had  risen,  in  the  first  six  months  of  the 
year  1888,  346,000  francs. 
13 


278  KECENT  ECONOMIC  CHANGES. 

experience  the  Roumanian  Government  has  finally  deter- 
mined to  reduce  its  customs  on  Austrian  merchandise  to 
such  an  extent  that  they  will  not  exceed  in  the  aggregate 
the  cost  of  their  transportation  to  Holland  or  Switzerland, 
added  to  the  duties  laid  by  legitimate  Swiss  and  Dutch 
goods  on  their  importation. 

The  policy  of  increasing  taxes  upon  imports,  and  im- 
posing further  restrictions  on  trade,  once  entered  upon  with 
a  view  of  securing  exceptional  advantages,  seems  also  to  find 
no  limitations  in  respect  to  its  exercise.  Thus,  in  France, 
since  her  former  liberal  commercial  policy  was  abandoned, 
the  duties  upon,  the  importation  of  wheat,  rye,  live-stock, 
alcohol,  and  numerous  other  commodities,  have  been  aug- 
mented to  many  times  their  former  rates ;  and  the  intention 
has  been  expressed  to  deal  in  the  same  way  with  all  foreign 
merchandise  at  the  expiration  of  her  few  remaining  treaties 
of  commerce,  or  "  conventional  tariffs."  The  duty  on  sheep 
imported  into  France,  which  was  formerly  thirty  centimes 
per  head,  has  been  progressively  raised  in  ten  years  to  five 
francs  ;  that  on  horned  cattle,  from  three  francs  sixty  cen- 
times to  thirty-eight  francs ;  on  codfish,  from  twelve  and  a 
half  francs  to  forty-eight  francs  per  one  hundred  kilo- 
grammes ;  while  on  rye,  a  leading  article  of  food  with  the 
French  peasantry,  a  former  duty  of  ten  francs  per  tonne  has 
been  raised  to  thirty  francs,  with  thirty  francs  additional  if 
the  rye  is  grown  in  any  country  out  of  Europe  and  imported 
from  any  country  in  Europe. 

In  the  United  States,  notwithstanding  the  average  ad 
valorem  rate  of  duty  on  dutiable  merchandise  has  increased 
from  41-6  per  cent  in  1884  to  47-10  per  cent  in  1888,  a  bill 
largely  advancing  rates  passed  the  Senate  in  January,  1889, 
which  has  been  characterized  by  the  United  States  Secre- 
tary of  the  Treasury  as  embodying,  in  respect  to  many  im- 
portant commodities,  "  the  very  refinement  of  severity  on 
taxation,  by  making  the  rates  either  absolutely  or  prac- 
tically prohibitive  ;  thereby  forbidding  competition  from 


INFLUENCE  OF  THE  RUSSIAN  TARIFF.  279 

abroad  and  subjecting  the  consumer  to  inexorable  exactions 
liable  and  likely  to  result  from  combinations  of  domestic 
producers."  * 

In  July,  1887,  Russia  increased  her  duties — which  were 
before  very  high — on  the  imports  of  all  foreign  iron  and 
steel,  to  a  point  that  is  regarded  as  nearly  or  quite  prohibi- 
tory of  all  imports;  and  Germany,  which  has  heretofore 
had  an  important  market  for  her  iron  and  steel  wares  in 
Russia,  and  has  also  been  a  large  purchaser  of  Russian  grain, 
has  since  then  further  advanced  her  duties  upon  the  import 
of  all  foreign  cereals,  her  object  being  avowedly  to  shut  out 
American  as  well  as  Russian  competition. 

A  government  commission,  appointed  to  inquire  into 
the  condition  of  Russian  agriculture,  recently  reported  the 
lack  of  knowledge  and  use  of  modern  tools  and  machinery 
as  one  of  the  prime  causes  that  stand  in  the  way  of  any  im- 
provement in  the  condition  of  the  Russian  peasantry  ;  and 
yet  the  high  duties  which  the  Government  imposes  on  the 
importations  of  such  tools  and  machinery  from  foreign 
countries — more  especially  from  England  and  the  United 
States — militates  more  than  any  other  one  agency  against 
their  introduction  and  employment.  It  is  not  disputed  that 
the  only  sound  basis  for  the  prosperity  of  Russia  lies  in  her 
agricultural  resources,  and  that  there  is  not  now,  and  neither 
is  there  likely  to  be,  any  important  exportation  of  com- 
modities other  than  agricultural  produce.  But  the  exist- 
ing Russian  tariff,  enacted  in  the  interests  of  Russian  manu- 
facturers, forces,  ships  to  arrive  in  her  ports  in  ballast,  there- 
by necessitating  that  the  exported  surplus  grain  of  the 
country,  which  if  not  sold  abroad  will  not  be  sold  at  all, 
shall  be  burdened  with  a  double  freight  rate — i.  e.,  for  the 
voyage  to  Russia  and  the  return  to  a  foreign  port  and 
market.  Russia  has  large  areas  of  her  territory  underlaid 
by  coal  of  the  best  quality;  the  coal-basin,  for  example, 

*  Letter  of  the  United  States  Secretary  of  the  Treasury,  February  27, 1889. 


280  RECENT  ECONOMIC  CHANGES. 

which  yields  the  famous  Silesian  coals,  whose  ashes  are 
like  the  ashes  of  beech-wood,  extending  far  across  the  Rus- 
sian frontier,  and  attaining  great  development  in  Poland. 
With  a  view  of  promoting  her  domestic  coal  industries, 
and  in  accordance  with  her  present  general  policy  of  ex- 
cluding, as  far  as  possible,  all  the  products  of  other  countries 
from  the  empire,  very  heavy  duties  have  been  imposed  for 
some  years  on  the  imports  of  foreign  coal.  The  result  has 
been  that  coal  has  been  rendered  more  expensive  on  the 
average  in  Russia  than  in  any  other  of  the  leading  countries 
of  Europe;  and  yet  so  irregular  and  deficient  is  the  sup- 
ply of  domestic  coal,  that  the  south  Russian  railways  are 
often  obliged  to  use  foreign  coal,  notwithstanding  the  duty. 
Again,  the  policy  by  which  so  many  German  manufacturers 
have  recently  been  driven  from  Russia,  has,  it  is  understood, 
almost  arrested  the  exploration  and  working  of  the  great 
coal  formation  in  Poland  above  noticed. 

It  is  further  most  interesting  to  note  how,  as  the  idea  of 
the  desirability  of  restricting  trade  and  commerce  is  accepted 
and  carried  out,  the  larger  and  more  logically  consistent 
idea  of  the  middle  ages,  that  restrictions  should  be  imposed, 
not  merely  on  the  freedom  of  commercial  intercourse  be- 
tween country  and  country,  but  also  between  districts  of  the 
same  country,  and  even  between  man  and  man,  tends  to  re- 
assert itself  and  demand  recognition  and  acceptance,*  as  is 
demonstrated  by  a  variety  of  incidents  on  both  sides  of  the 
Atlantic.  In  this  movement  in  Europe,  France  at  present 
takes  the  lead.  Thus,  for  example,  French  workmen  and 
employers  are  apparently  now  in  unison  of  opinion  that  all 


*  If  foreign  trade  is  something  bad  in  itself,  by  a  parity  of  reasoning, 
domestic  trade  must  be  also  more  or  less  injurious.  If  nations  and  states 
grow  rich  and  prosperous  by  not  trading  with  one  another,  the  same  principle 
ought  to  hold  good  in  respect  to  neighboring  cities  and  towns,  and  between 
man  and  man.  These  were  indeed  the  views  of  the  statesmen  of  the  fifteenth, 
sixteenth,  seventeenth,  and  eighteenth  centuries,  and  they  practically  enforced 
them  so  far  as  the  contrary  natural  instincts  of  man  would  permit. 


TRADE  RESTRICTIONS  IN  FRANCE.  281 

foreigners  shall  be  rigidly  excluded  from  any  kind  of  work 
done  by  or  for  the  Government,  and  from  furnishing  any 
kind  of  supplies  for  the  public  service.  Among  the  bills 
recently  brought  forward  in  the  French  Chamber  of 
Deputies,  and  which  have  received  the  serious  attention  of 
the  Government,  one  provides  that  only  French  coal  shall 
be  used  in  the  navy,  and  only  French  oats  in  the  army ; 
and,  in  general,  that  nothing  of  foreign  growth  or  produc- 
tion shall  be  bought  for  public  use,  except  such  articles  as 
are  not  produced  in  France.  Clauses  in  existing  treaties 
with  foreign  nations  and  apprehensions  of  reprisals  have,  it 
is  believed,  alone  prevented  the  project  of  imposing  special 
and  differential  taxes  on  all  foreign  workmen.  The  com- 
mittee in  charge  of  the  French  International  Exhibition  of 
1889,  while  invoking  the  co-operation  and  good  feeling  of 
other  countries,  restricted  all  bids  for  buildings  to  French 
firms  exclusively,  ruling  out  all  foreign  firms  from  partici- 
pation in  the  work,  even  though  established  in  France,  and 
employing  only  French  workmen.  The  ancient  guild  system 
of  the  middle  ages,  restricting  craft- membership  and  the 
employment  of  apprentices,  and  claiming  the  right  to  ex- 
clusively regulate  prices,  hours  of  labor,  and  other  condi- 
tions of  service,  is  also  everywhere  re-establishing  itself; 
the  glaziers  of  Paris  leading  the  advance  in  this  direction, 
by  formally  petitioning  the  authorities  for  incorporation  as 
a  guild,  to  which  no  foreigner  shall  be  admitted,  and  no 
one  not  a  member,  even  if  he  be  a  Frenchman,  shall  be 
allowed  to  set  glass  or  make  repairs  upon  windows  in  French 
territory. 

Paris  carpenters  and  joiners  having  complained  to  the 
Municipal  Council  of  the  city,  that  joiner's  work  was  sent 
from  the  provinces,  where  labor  was  cheaper,  the  Council 
have  recently  protected  the  Paris  workmen  against  the 
competition  of  French  workmen  in  the  country  by  raising 
the  octroi  duty  on  all  sawed  and  worked  wood  brought  into 
the  city.  Taking  advantage  of  this  precedent,  the  Parisian 


282  RECENT  ECONOMIC  CHANGES. 

laundresses  have  also  demanded  protection  against  the  com- 
petition of  those  in  the  suburbs,  whose  prices  are  lower  than 
those  charged  in  the  city,  and  have  petitioned  the  Munici- 
pal Council  to  levy  an  octroi  duty  on  all  clean  linen  brought 
into  Paris. 

In  a  discussion  of  the  labor-problem  at  a  recent  Catholic 
Congress  in  Belgium,  the  Bishop  of  Liege  is  reported  as 
saying  that  the  old  trade-guilds  must  be  revived  and  placed 
under  the  guardianship  of  Christian  lay  employers  and  of 
the  clergy.  Then  each  trade  or  calling  must  be  placed 
under  the  special  protection  of  a  saint ;  and  brotherhoods 
of  those  engaged  in 'it,  composed  both  of  employers  and 
workmen,  must  be  formed  for  the  celebration  of  the  saint's 
fete  and  for  participation  in  religious  processions  and  fu- 
nerals, and  the  rendering  of  mutual  assistance  in  times  of 
need.  But  it  was  also  remarked  that  while  labor  was  pretty 
sure  to  indorse  the  recommendation  of  the  revival  of  the 
guild,  it  would  be  equally  sure  to  wholly  disregard  the  ideas 
of  the  bishop  as  to  the  use  that  should  be  made  of  it.  It 
should  also  not  be  overlooked,  in  this  connection,  IIOAV  closely, 
and  yet  perhaps  unintentionally,  the  modern  labor  organi- 
zations— "Trades-Unions,"  "Knights  of  Labor,"  and  the 
like — have  come  to  resemble  and  be  assimilated  to  the 
ancient  "guilds* ';  with  this  marked  difference,  that  in  the 
old  craft-guilds  the  masters  or  employers  of  labor  remained 
in  and  participated  in  the  organization  ;  but,  in  the  modern 
organizations  of  labor,  the  masters  or  employers  are  espe- 
cially excluded. 

In  Germany  the  extensive  intervention  of  the  state  in 
industrial  and  social  matters  has  come  to  be,  in  recent  years, 
a  fundamental  policy  of  the  Government ;  and  is  resulting 
in  a  series  of  experiments  for  controlling  or  even  entirely 
absorbing  great  industries — as  sugar  and  distilled  spirits — 
and  for  promoting  the  economical  and  moral  prosperity  of 
the  people  by  schemes  for  compulsory  insurance  of  life  and 
against  accidents,  which  have  hitherto  had  no  precedents  in 


TRADE  RESTRICTIONS  IN  THE   UNITED  STATES.    283 

the  legislation  of  any  country ;  and  which  will  require  a  long 
time  before  final  judgment  can  be  pronounced  on  their  ex- 
pediency and  practicability.  At  the  same  time,  in  all  these 
movements  the  Government  makes  no  secret  of  its  desire,  in 
fostering  the  interests  of  the  people,  to  concurrently  aug- 
ment their  ability  to  pay  taxes. 

In  the  United  States,  notwithstanding  the  provisions  in 
the  Federal  Constitution  to  the  contrary,  an  attempt  has 
been  made  during  the  present  year  (1889)  to  enlarge  the 
sphere  of  the  "  protective  "  (restrictive)  policy,  and  make  it 
applicable,  not  merely  to  the  competitive  products  of  for- 
eign countries,  but  also  to  the  competitive  products  of  the 
different  States  comprised  in  the  Federal  Union  ;  bills  hav- 
ing been  introduced  in  the  Legislatures  of  several  States, 
and  enacted  into  law  in  two,  prohibiting,  through  indirect 
methods,  the  importation  of  dressed  meat,  the  product  of 
other  States.  It  seems  hardly  necessary  to  say  that  such 
propositions  and  enactments  are  antagonistic  to  the  fun- 
damental idea  upon  which  the  Federal  Union  of  States, 
known  as  the  "  United  States,"  is  based — namely,  the  idea 
of  equality  of  rights  in  all  the  States  to  the  citizens  of  each 
and  every  State — and  involve  the  recognition  of  a  principle 
which  needs  only  a  wider  application  to  effect  the  dismem- 
berment of  the  republic. 

The  recent  action  of  the  French  Government,  in  provid- 
ing that  nothing  shall  be  bought  for  public  use  which  is  not 
of  domestic  production,  and  which  the  outside  world  has 
regarded  as  a  policy  unworthy  of  an  enlightened  nation,  has 
also  had  its  counterpart  and  precedent  in  the  previous  legis- 
lation of  quite  a  number  of  the  States  of  the  Federal  Union ; 
with  this  exception,  that  in  France  the  discrimination  is 
made  against  foreigners  only,  while  in  the  United  States 
the  discrimination  is  made  against  their  own  countrymen 
living  in  different  political  divisions  of  the  country. 

Nothing,  furthermore,  in  the  way  of  intervention  with 
the  domestic  pursuits  and  social  practices  of  the  people  can 


284  RECENT  ECONOMIC  CHANGES. 

be  found  in  Germany  or  Europe  to  parallel  the  recent  legis- 
lation of  one  of  the  leading  States  of  the  Northwest  (Min- 
nesota), a  large  part  of  which  was  the  work  of  a  single  legis- 
lative session  (limited  to  sixty  days)  in  1885,  and  which  has 
thus  been  described  by  a  recent  writer :  * 

Prominent  in  importance  were  statutes  providing  for  the 
weighing,  handling,  and  inspection  of  grain ;  the  construc- 
tion and  location  of  grain- warehouses,  the  providing  of  cars 
and  side-tracks  by  railroads,  and  the  regulation  of  rates  of 
transportation.  Next,  was  legislation  respecting  State  loans 
of  "  seed-grain  "  to  farmers  whose  crops  had  been  ruined  by 
grasshoppers;  for  the  subsidizing  of  State  fairs  from  the 
State  treasury ;  for  enabling  farmers  to  avoid  the  payment 
of  a  portion  of  their  debts;  for  protecting  butter-makers 
from  the  competition  of  artificial  products,  such  as  "  butter- 
ine " ;  for  regulating  the  details  of  the  cattle  industry,  to 
the  extent  of  registering  and  giving  State  protection  to 
brands  and  other  modes  of  identification,  and  of  stamping 
out  contagious  diseases  with  small  courtesy  to  the  rights 
and  wishes  of  individual  owners ;  and  for  regulating  the 
lumber  business  to  such  an  extent,  that  not  a  log  can  float 
down  a  stream  to  the  saw-mill  for  which  it  is  destined  with- 
out official  cognizance.  One  State  board  regulates  the  prac- 
tice of  medicine  and  the  admission  of  new  practitioners  ;  a 
second,  the  examination  of  druggists  and  compounding 
clerks,  as  precedent  to  entering  into  business ;  while  a  third 
regulates  the  practice  of  dentistry.  Various  enactments  pre- 
scribe the  toll  to  be  exacted  for  grinding  wheat ;  when  one 
man  may  slay  his  neighbor's  dog  with  impunity  ;  how  rail- 
way companies  must  maintain  their  waiting-rooms  at  their 
stopping-places  for  passengers ;  the  hours  of  labor,  and  the 
employment  of  women  and  children  ;  the  maximum  time 
for  which  locomotive  engineers  and  firemen  may  be  con- 

*  "  The  American  State  and  the  American  Man,"  Albert  Shaw,  "  Con- 
temporary Review,"  May,  1887. 


ANTAGONISM  OF  NATIONALITIES.  285 

tinuously  employed  ;  what  books  shall  be  used  in  the  public 
schools  ;  forbidding  "  raffles  "  at  church  fairs  under  "  fright- 
ful penalties,"  and  making  it  a  crime  to  give  away  a  lottery- 
ticket,  and  a  misdemeanor  "  to  even  publish  an  account  of  a 
lottery,  no  matter  when  or  where  it  has  been  conducted." 
Among  bills  introduced,  and  which  found  considerable  sup- 
port, but  were  not  enacted,  was  one  forbidding  persons  of 
different  sexes  to  skate  together,  or  even  be  present  at  the 
same  hour  on  the  rink  floor ;  and  another  to  license  drink- 
ers, which  provided  that  no  person  should  be  permitted  to 
use  intoxicants  or  purchase  liquors  of  any  kind  without 
having  first  obtained  a  public  license. 

Concurrently  with  the  increasing  restrictions  in  recent 
years  on  the  commercial  intercourse  of  nations,  and  as  an 
undoubted  sequence  or  phase  of  such  policy,  has  come  also 
a  revival  of  the  idea  which,  since  the  successful  revolt  of 
the  British  American  colonies  and  the  abandonment  of  the 
old-time  European  colonial  policy,  has  been  regarded  as 
alike  antagonistic  to  civilization  and  the  Christian  precept 
of  national  brotherhood  and  the  interdependence  of  man- 
kind, namely,  that  it  is  advantageous  for  the  people  of  the 
separate  nationalities  to  forbid  immigration  and  residence, 
with  a  view  of  participating  in  their  industries  and  develop- 
ing their  natural  resources,  to  the  people  of  other  countries. 
In  initiating  this  retrogression  in  the  comity  of  nations,  Rus- 
sia took  the  lead  by  adopting  measures  looking  first  to  the 
expulsion  of  her  Jewish  subjects,  then  of  all  resident  for- 
eigners engaged  in  manufacturing  or  mining,  and,  finally, 
by  forbidding  any  foreigner  from  becoming  or  continuing  a 
landed  proprietor  within  her .  empire.  Germany  followed, 
by  expelling  great  numbers  of  Poles  from  her  northeastern 
provinces,  under  the  pretext  that  they  were  Catholics  (or 
non- Lutherans)  and  Slavs,  but,  in  truth,  because  the  more 
civilized  and  more  Christian  (?)  German  laborers  disliked 
their  industrial  competition.  The  United  States,  in  like 
manner,  has  forbidden  the  emigration  and  residence  within 


286  RECENT  ECONOMIC  CHANGES. 

her  territory  of  the  Chinese,  ostensibly  because  they  are 
"  heathen,"  immoral,  and  not  capable  of  political  assimila- 
tion, but  really  because  they  have  labor  to  sell  in  competition 
with  other  like  vendors  ;  and  a  bill  has  been  reported  in  the 
Federal  House  of  ^Representatives — but  not  passed — which 
imposes  conditions  on  the  landing  in  the  United  States  of 
any  immigrant  whatever,  which  are  capable  of  a  very  strin- 
gent restrictive  application.  Australia,  also,  is  expelling  the 
Chinese  bodily  from  her  colonies  ;  and  intimations  are  made 
that  China,  in  retaliation,  will  fall  back  upon  her  old-time 
policy  of  commercial  seclusion,  at  least  to  the  extent  of  ex- 
pelling from  her  empire  the  citizens  of  those  states  that 
have  discriminated  against  her  own  people.  France,  by  a 
decree  in  1888,  orders  that  all  foreigners  settling  perma- 
nently in  France  must  be  registered  and  obtain  permission 
to  do  so  ;  the  main  and  avowed  object  of  the  same  being  to 
restrict  or  prevent  the  further  immigration  and  settlement  of 
the  Belgians  and  Italians,  who  are  the  only  foreigners  who 
participate  to  any  extent  in  the  domestic  trade  and  industry 
of  the  country ;  and  it  is  understood  that  this  registration 
is  only  a  preliminary  step  to  the  imposition  of  heavy  differ- 
ential taxes  upon  all  immigrants  into  France  who  receive 
wages.  It  is  not  alleged  that  these  classes  of  foreign  immi- 
grants disobey  the  laws  of  France  or  resist  her  officials ;  but, 
on  the  contrary,  it  is  conceded  that  they  pay  their  taxes  as 
regularly  as  French  citizens,  and  do  not,  like  the  Chinese  in 
the  United  States  or  the  Jews  in  Southeastern  Europe,  per- 
ceptibly lower  the  standard  of  general  civilization.  As  for- 
eigners, they  are,  however,  exempt  from  the  burden  of  con- 
scription for  military  service,  which  is  now  more  severe  in 
France  than  in  any  other  country  except  Kussia.  The  Ital- 
ians, on  the  other  hand,  in  the  absence  of  law,  are  endeavoring 
to  drive  away  French  workmen  from  northern  Italy ;  resort- 
ing even,  in  some  instances,  to  physical  force  to  effect  their 
object.  The  Swiss,  also,  by  their  communal  laws,  heavily 
handicap  the  foreigner,  who  shares  in  none  of  the  communal 


EVIDENCES  OF  REACTION.  287 

distributions  ;  and  even  in  England  there  is  a  loud  demand 
for  interference  with  the  Polish  Jews,  who  in  some  quarters 
of  London  underbid  certain  descriptions  of  artisans,  and  are 
becoming  an  objectionable  feature  in  the  population.  In 
truth,  it  would  seem  as  if  the  people  of  the  different  nationali- 
ties are  beginning  to  dislike  each  other  as  they  used  to  do  in 
the  middle  ages,  though  for  entirely  different  reasons  ;  the 
old-time  feeling  of  antagonism  having  been  mainly  due  to 
mutual  ignorance  of  each  other ;  while  in  these  latter  days 
it  is  undoubtedly  referable  to  an  increased  acquaintance, 
due  to  the  greatly  increased  facilities  for  personal  intercom- 
munication. "  National  brotherhood  for  the  future  seems 
therefore  likely  to  be  made  more  cordial  by  non-intercourse." 
One  further  sequence  of  this  condition  of  affairs — apart 
from  the  economic  disturbances  and  contingent  losses  it 
has  occasioned — which  may  be  regarded  as  certain  is,  that 
the  amity  between  nations,  which  has  grown  so  much  during 
the  last  half -century,  and  which  it  has  been  fondly  hoped 
would  put  an  end  to  war  and  enormous  anticipatory  war 
expenditures,  has  experienced  a  marked  decrease  within  a 
recent  period. 

The  outlook  for  the  future  has,  however,  one  encouraging 
feature ;  and  that  is,  that  the  result  of  such  a  conflict  of  tar- 
iffs as  has  prevailed  in  Europe  since  1877-'78  has  entailed 
so  much  of  commercial  friction,  such  a  series  of  retaliatory 
measures,  and  such  an  arrest  of  material  development,  that 
there  are  now  many  signs  that  the  continuation  of  this  state 
of  affairs  will  not  be  much  longer  endurable.  In  this  con- 
flict, Austria,  which  was  the  first  country  that  broke  in 
upon  the  International  Commercial  Union  that  prevailed 
among  the  Continental  states  prior  to  1878,  has  suffered 
most  severely ;  her  exports  and  imports  having  notably  de- 
creased, while  her  customs  taxes  have  risen  in  recent  years 
from  Is.  8d.  to  3s.  Id.  per  head  of  her  population,  and  her 
internal  taxes  on  consumption  from  3s.  Id.  to  6s.  Sd.  Be- 
tween 1877  and  1888  Austria's  exports  of  cereals  to  Ger- 


288  RECENT  ECONOMIC  CHANGES. 

many  decreased  from  131,000,000  florins  to  101,000,000. 
In  1878  her  exports  of  wheat  were  6,000,000  cwts.,  but  in 
1886,  when  there  was  by  no  means  a  bad  harvest  in  Austria- 
Hungary,  they  were  reduced  to  1,570,000  cwts.  During  the 
same  time  her  exports  of  cattle  have  been  reduced  to  one 
fourth  and  of  pigs  to  one  half  of  their  former  proportions. 
There  has  been  a  marked  decline  in  banking  profits,  an  in- 
crease in  the  mortgages  on  real  property,  and  a  decline  in 
the  consumption  both  of  meat  and  of  farinaceous  articles  of 
food.  To  such  an  extent  has  her  fiscal  policy  invited  repris- 
als that  she  is  described  as  "  standing  alone  commercially," 
and  reduced  to  the  position  of  consuming  her  own  products 
through  necessity.  On  the  other  hand,  the  export  trade  of 
Germany  with  Austria-Hungary  has  suffered  even  more.  In 
the  five  years  ending  in  1887,  its  aggregate  decrease  is  re- 
ported as  70,000,000  florins.  In  1881,  248,000,000  florins' 
worth  of  manufactured  goods  were  exported  by  Germany  to 
Austria  and  Hungary ;  in  1886,  the  sum  amounted  to  204,- 
000,000  only.  In  1882,  the  quantity  of  twist  exported  was 
18,000,000  florins ;  in  1886,  it  was  12^  millions.  The  ex- 
ports of  iron  and  iron  articles  also  decreased  in  these  same 
years  from  17^  to  T^-  million  florins.  The  recent  prohibi- 
tory duties  decreed  by  Russia  on  the  importation  of  iron  and 
steel  have  closed  numerous  iron-furnaces  in  Silesia,  and 
some  of  the  frontier  towns  of  north  Germany,  which  are 
extensively  interested  in  flour-milling,  have  also  suffered 
severely  by  the  all  but  prohibitory  duties  imposed  by  Ger- 
many on  the  imports  of  Russian  grain.  In  Konigsberg, 
for  example,  business  is  mainly  dependent  on  the  Russian 
grain-trade ;  but  German  grain  is  now  so  well  protected  that 
only  20,000  tons  of  Russian  wheat  came  into  Konigsberg 
in  1887,  as  compared  with  60,000  tons  in  1884.  The  same 
place  used  also  to  do  a  good  business  with  Russia  in  tea,  but 
the  Russian  tariff  has  killed  this,  so  that  the  city  appears 
almost  in  a  state  of  decay. .  Dantsic  is  suffering  in  the  same 
way,  from  the  same  causes,  aggravated  by  the  expulsion  of 


RECENT  TRADE  EXPERIENCES  OP  EUROPE.      289 

the  Poles  and  Jews  from  Eussia,  who  played  an  important 
part  in  the  local  trade  of  the  frontiers.  While  one  of  the 
main  objects  of  the  present  German  tariff  was  to  effectually 
protect  her  iron  and  steel  industries,  experience  is  showing 
that  these  same  industries  are  less  able  than  formerly  to 
compete  in  foreign  markets  for  the  sale  of  their  products. 
The  price  of  steel  rails  was  much  higher  in  1888  in  Ger- 
many than  in  either  England  or  Belgium ;  and  German 
manufacturers  complain  that,  by  reason  of  the  high  prices 
they  have  to  pay  for  their  crude  materials,  they  are  not  only 
unable  to  obtain  foreign  contracts,  but  are  put  upon  the  de- 
fensive as  regards  English  and  Belgian  makers.  Compar- 
ing 1888  with  1887,  the  German  exports  of  pig-iron,  rails 
and  manufactures  of  iron  decreased  2,095,820  tons,  or  over 
sixteen  per  cent ;  while  her  imports  of  the  same  increased 
to  the  extent  of  538,301  tons,  or  nineteen  per  cent.  And  of 
this  increase  of  imports  Great  Britain  furnished  the  greater 
part. 

The  returns  of  the  foreign  trade  of  France — imports  and 
exports — show  a  continuous  decline  since  1880.  Notwith- 
standing her  high  protective  duties,  the  importation  by 
France  in  1888  of  articles  of  food  increased  by  more  than 
80,000,000  francs,  while  her  exports  of  the  same  decreased 
to  the  extent  of  17,000,000.  France  purchased  in  1888 
44,500,000  francs  less  in  raw  material  and  partly  manu- 
factured goods,  and  exported  less  than  in  the  previous  year. 
Of  manufactures,  her  exports  were  notably  less  in  1888  than 
in  1887.  The  production  of  iron  and  steel  in  France  de- 
clined between  the  years  1883  and  1886  to  the  extent  of 
850,000  tons,  or  twenty-four  per  cent.  There  was  some  re- 
covery in  production  in  1887 — estimated  at  95,000  tons — 
mainly  of  pig-iron. 

The  statistics  of  the  foreign  trade  of  Italy  for  1888  are 
particularly  striking  and  instructive.  During  the  year  1887 
a  general  increase  in  her  tariff  rates  on  imports  took  effect, 
and  the  tariff-war  between  Italy  and  France  broke  out. 


290  RECENT  ECONOMIC  CHANGES. 

The  immediate  result  was  a  great  decrease  in  the  exports 
and  imports,  and  in  the  customs  revenue  of  the  country. 
Comparing  1888  with  1887,  the  decrease  in  the  value  of  im- 
ports was  twenty-six  per  cent ;  in  exports,  eleven  per  cent ; 
and  in  revenue,  24-8  per  cent.  For  the  fiscal  year  1889-'90 
the  revenue  of  the  kingdom  is  estimated  at  £61,820,000 
($290,355,000),  and  the  deficit  of  receipts  to  expenditures 
at  about  £9,000,000  ($43,740,000).  The  condition  of  the 
country  under  the  combined  influences  of  increased  war  ex- 
penditures and  restrictions  in  trade  has  been  recently  de- 
scribed by  Count  Guisso,  ex-Mayor  of  Naples,  and  a  mem- 
ber of  the  Italian  Parliament,  as  most  critical.  From  one 
end  of  the  peninsula  to  the  other  the  cry  is,  he  says,  "  Give 
us  the  means  of  selling  our  products,  and  we  will  pay  the 
taxes."  * 

Russia  having  sought  to  close  her  doors  against  the 
produce  of  other  countries,  they  in  their  turn  have  curtailed 
their  purchases  of  Russian  products ;  and  the  shrinkage  in 
the  foreign  trade  of  Russia  in  recent  years,  and  during  a 
period  of  peace,  has  accordingly  been  almost  without  prece- 
dent in  commercial  history.  Comparing  1883  with  1887, 
the  decline  in  her  imports  was  from  £51,371,000  to  £29,- 
160,000  (the  depreciation  of  the  value  of  the  ruble  being 
taken  into  account),  or  forty-three  per  cent ;  while  in  the 
case  of  her  exports  the  decline,  although  not  so  marked 
(owing  to  large  shipments  of  cereals  contingent  on  good 
harvests),  was  still  very  significant — namely,  from  £60,788,- 
000  in  1883  to  £43,651,000  in  1886,  or  twenty-six  per  cent.f 

*  See  also  page  178. 

t  The  restricted  character  of  the  foreign  commerce  of  Russia,  as  measured 
by  the  value  of  her  imports,  is  well  illustrated  by  comparing  their  aggregate 
(estimated  at  £29,160,000,  or  $141,717,600  for  1887)  with  the  aggregates  of 
other  leading  nations  during  recent  periods.  Thus,  in  the  case  of  Great  Brit- 
ain, the  aggregate  net  value  of  her  imports  for  1888  was  £321,968,579  ($1,503,- 
757,000);  for  the  "United  States,  1887-'88,  $723,957,000;  Holland,  1887,  $457,- 
072,000;  France,  1888,  $810,000,000.  "While  excluding  foreign  products  by 
almost  prohibitory  duties,  Russia  at  the  same  time  continues  to  supply  West- 


FOREIGN  COMMERCE  OP  GREAT  BRITAIN.       291 

On  the  other  hand,  and  in  striking  contrast,  the  returns  of 
the  foreign  commerce  of  Great  Britain  for  1888  show  a  gain 
in  the  aggregate  net  value  of  her  exports  and  imports  of 
£20,632,000  ($100,271,000)  as  compared  with  the  aggregates 
of  1887.  In  fact,  the  idea  that  a  few  years  ago  found  great 
acceptance  in  Europe,  and  undoubtedly  influenced  the  com- 
mercial policy  of  the  different  states — namely,  that  increased 
restrictions  on  the  importation  and  competitive  sales  of  for- 
eign products  and  the  resort  of  bounties  on  exports  would 
conjointly  stimulate  industries,  relieve  their  markets  from 
anything  like  over-production,  and  inaugurate  a  period  of 
general  prosperity  —  has  utterly  failed  of  realization  when 
subjected  to  the  test  of  long  and  actual  experience ;  and  for 
the  following  reasons :  The  stimulus  being  artificial,  was 
unnatural.  Production  rapidly  increased,  and  soon  created 
an  additional  supply  of  articles,  which  were  already  produced 
in  the  localities  best  fitted  for  their  production,  in  quanti- 
ties sufficient,  or  more  than  sufficient,  to  meet  any  existing 
market  demand  at  remunerative  prices,  thus  occasioning  an 
augmentation  of  the  very  evils  which  it  was  expected  the 
restrictive  commercial  policy  would  prevent,  and  which  may 
be  enumerated  in  their  sequential  order  somewhat  as  fol- 
lows: 1.  Over-production  in  the  natural  seats  of  production. 
2.  Domestic  competition  to  effect  sales  destructive  of  all 
profits.  3.  Special  concessions  of  prices  to  effect  sales  in 
foreign  countries  which  have  been  disturbing  to  the  legiti- 
mate industries  of  such  countries.  4.  A  general  depression 
of  prices,  and  the  reduction  of  business  profits  to  a  mini- 
em  Europe  with  grain ;  and  having  been  favored  with  three  good  harvests  in 
succession,  the  balance  of  trade  in  her  favor  has  been  attained  as  completely 
as  any  one  could  desire ;  and  for  the  first  ten  months  of  1888  amounted  to  no 
less  than  327,000,000  rubles.  All  this,  however,  has  not  brought  favorable 
results  to  the  country,  and  especially  to  the  grain-producers ;  the  tenor  of 
official  reports  being  that  the  peasantry  are  so  borne  down  by  the  burden  of 
their  taxation,  and  lack  of  facilities  for  selling  their  produce,  that  even  in  the 
past  years  of  abundant  harvests  their  condition  has  not  experienced  any  sen- 
sible improvement. 


292  RECENT  ECONOMIC  CHANGES. 

mum — all  resulting  in  a  condition  of  affairs  which  two  years 
ago  is  said  to  have  drawn  out  from  Count  Karolyi,  the  Prime 
Minister  of  Austria,  the  assertion  that  "  the  European  States, 
by  their  present  retaliatory  tariffs,  are  doing  themselves  more 
injury  than  the  most  unrestricted  international  competition 
could  possibly  inflict." 

It  seems  to  be  also  now  generally  conceded  in  Germany 
and  other  states  of  Europe  that  the  depression  of  business 
and  the  disturbances  occasioned  by  the  fall  of  prices,  which 
were  most  influential  in  inducing  the  general  reaction  in 
favor  of  protective  duties  in  1878,  were  due  to  causes  that 
were  not  to  be  reached  by  such  remedies,  and  that  the  same 
continue  operative  to-day  in  spite  of  all  the  customs  barriers 
against  international  trade  that  have  been  erected.  Hard 
experience  is  also  forcing  conviction  into  the  minds  of  men 
everywhere,  that  the  tendency  to  impose  restrictions  on  ex- 
changes by  high  protective  taxes  is  directly  antagonistic  to 
the  progress  of  modern  methods  of  transportation ;  and  that 
it  is  clearly  irrational  to  expend  large  sums  in  constructing 
and  perfecting  railways  and  steamships,  and  then  place  diffi- 
culties in  the  way  of  marketing  the  merchandise  they  carry. 
All  the  indications,  therefore,  seem  to  favor  a  reactionary 
commercial  policy  in  Europe,  and  a  termination  of,  at  least, 
the  severity  and  intolerance  of  the  existing  trade  restrictions 
between  the  Continental  states,  Russia  excepted.  The  fol- 
lowing are  additional  evidences  in  favor  of  such  a  conclu- 
sion :  The  German  Chambers  of  Commerce,  in  their  recent 
reports,  have,  with  very  few  exceptions,  declared  against  the 
present  tariff  policy  as  most  injurious  to  the  industry  and 
commerce  of  the  empire.  A  recent  report,  especially,  of  the 
Stuttgart  Chamber  of  Commerce,  earnestly  urges  the  Gov- 
ernment to  improve  trade  by  a  return  to  its  former  recipro- 
cal conditions.* 

*  "The  result  of  the  intensive  and  extensive  development  of  the  protective 
system,"  observes  the  Stuttgart  Chamber  of  Commerce,  "notwithstanding  its 


REDUCTION   OF  EUROPEAN  TARIFFS.  293 

With  a  view  of  promoting  navigation,  Austria  has  re- 
cently decreed  that  materials  and  machines  for  the  building 
of  ships  may  be  imported  free  of  duty.  Eoumania,  after 
having  enacted  almost  prohibitive  tariff  duties,  is  beginning 
to  modify  them  by  granting  special  favors ;  a  manufacturer 
of  wooden  articles,  for  example,  having  been  granted  fifteen 
years'  free  import  of  wood  under  the  condition  that  eighty 
per  cent  of  the  goods  manufactured  are  again  exported. 
New  commercial  treaties,  involving  limited  reciprocities, 
have  been  made  during  the  past  year  (1888)  between  Aus- 
tria and  Switzerland,  and  Germany  and  Switzerland.  In 
the  former,  Austria  reduces  her  duties  on  Swiss  cotton  fab- 
rics, silks  and  laces,  condensed  milk,  and  a  few  other  arti- 
cles, and  Switzerland  on  her  imports  of  Austrian  cattle  and 
mineral  waters.  In  the  latter,  which  is  shared  by  other 
countries  to  whom  Germany  has  accorded  the  position  of  the 
most  favored  nations,  Germany  considerably  recedes  from 
the  extravagantly  high  duties  imposed  in  1885  on  watches, 
cotton  embroideries,  and  silk  fabrications,  and  Switzerland 
makes  concessions  on  certain  German  manufactures,  as  lin- 
ens, ready-made  clothing,  etc.  A  treaty  of  commerce  be- 
tween Austria  and  Italy,  negotiated  in  1878,  expires  during 
the  year  1889,  and  the  Austrian  Government  has  the  ques- 
tion of  its  renewal  under  consideration.  If  the  existing  re- 
strictive commercial  policy  of  the  empire  is  to  prevail,  it 

beneficial  influences  on  many  branches  of  industry,  has  been  to  doubly  in- 
crease the  international  uncertainty  which  now  burdens  trade  and  commerce. 
Every  movement  in  favor  of  protective  duties  results  in  efforts  on  the  part  of 
each  country  interested  in  the  matter  to  outbid  its  neighbor ;  and  the  very 
duty  which  is  expected  to  protect  a  nation  produces  a  reaction  on  home  prices, 
and  causes  them  to  become  assimilated  to  those  of  international  commerce." 
This  Chamber  believes  that  the  prospect  of  a  hasting  improvement  in  trade 
would  "  be  better  grounded  could  only  further  exactions  in  international  cus- 
toms tariffs  be  avoided,  and  the  uncertainty  of  market-price,  which  is  the 
outcome  of  the  protective  system,  be  removed  by  an  equitable  establishment 
of  mutual  customs  and  commercial  relations,  by  an  increased  stability  and 
certainty  of  the  duration  of  tariffs,  and  by  a  reciprocal  return  to  former  con- 
ditions." 


294  RECENT  ECONOMIC  CHANGES. 

will  not  be  renewed ;  but  a  circular  issued  by  M.  Bacque- 
hem,  Minister  of  Commerce,  to  the  Austrian  Chambers  of 
Commerce,  has  much  significance.  For  in  it  he  says : 

"  It  is  important  to  maintain  intact  the  outlets  offered  to  the  com- 
merce, agriculture,  and  manufactures  of  the  country.  Nay,  it  is  desir- 
able to  increase  these  outlets  in  various  directions.  But  the  only  way 
to  do  this  is  to  have  with  the  other  powers  treaties  of  commerce  based 
on  stipulated  tariffs.  The  conclusion  of  such  treaties  is  now  the  work 
before  the  Government." 

Nevertheless,  there  are  great  difficulties  to  be  overcome, 
as  the  Italians  think  that  the  Austrian  treaty  of  1878  has 
been  disadvantageous  to  them,  because  under  it  Austrian 
exports  to  Italy  have  risen  by  13 -3  per  cent,  while  those  of 
Italy  to  Austria  have  decreased  by  forty-five  per  cent. 

In  Germany,  when  the  era  of  tariff  protection  was  in- 
augurated, it  was  maintained  that  its  effect  would  be  a  more 
equal  distribution  of  wealth;  but  the  German  people  are 
now  fast  recognizing  that  the  result  has  been  to  increase  the 
strength  of  the  great  bankers  and  manufacturers,  who,  hav- 
ing nothing  to  fear  from  foreign  competition,  now  exercise 
complete  control  over  the  home  market,  and,  through  the 
creation  of  a  great  n amber  of  "trusts"  or  "syndicates," 
have  been  especially  successful  in  enforcing  higher  prices  on 
consumers.* 


*  In  Germany,  which  leads  all  other  countries  in  the  number,  variety,  and 
power  of  its  trusts,  it  is  admitted  that  their  formation  began  immediately  after 
the  passage  of  the  high  tariff  law  of  1879.  A  recent  writer  in  the  "  Economiste 
Francais"  (M.  Raffalovich),  as  the  result  of  a  study  of  the  trade  combinations 
of  all  countries — indeed  contends — that  any  trade  or  manufacturing  syndicate 
not  having  "  the  advantage  of  fiscal  protection,  and  which  operates  on  any 
article  of  which  the  production  is  not  extremely  restricted  and  for  more  than 
a  very  brief  period,  is  absolutely  certain  to  end  in  disaster."  There  are  in- 
stances of  so-called  trusts  in  articles  unprotected  by  tariffs  that  appear  to  con- 
tradict this  theory ;  but  M.  Raffalovich  believes  they  are  all  capable  of  expla- 
nation consistent  with  his  conclusion.  The  most  striking  instance  in  the 
United  States  is  the  Standard  Oil  Company ;  but  in  this  case  the  absence  of 
foreign  competition  until  recently  and  its  comparative  disadvantages  has  had 
the  same  effect  on  the  domestic  market  as  a  prohibitive  tariff.  Evidently  no 


PROPOSED  EUROPEAN  ZOLLVEREIN.  £95 

One  project,  originally  proposed  by  Prof.  Kaufmann,  of 
the  University  of  Tubingen,  with  a  view  of  improving  the 
condition  of  trade  of  Germany,  which  has  been  much  dis- 
cussed, and  the  adoption  of  which,  in  the  opinion  of  not  a 
few,  is  not  improbable,  is  the  formation  of  a  Zollverein,  or 
commercial  union,  among  the  nations  of  Central  Europe, 
with  a  view,  as  the  "  Kolnische  Zeitung  "  (which  is  regarded 
to  some  extent  as  an  official  organ  of  the  German  Govern- 
ment) has  expressed  it,  "of  expanding  their  markets  by 
means  of  treaties,  so  that  the  surpluses  at  any  one  place 
within  their  dominions  may  serve  to  make  up  for  the  de- 
ficiencies in  another,"  and  which,  more  especially,  would 
"  find  its  account  in  collectively  fighting  against  economical 
commonwealths,  like  the  United  States,  Kussia,  China,  and 
Great  Britain,  which  embrace  whole  continents."  f 

THE  EXPERIENCE  OF  THE  BEET-ROOT  SUGAR  BOUN- 
TIES.— The  attempt  to  artificially  stimulate  the  manufacture 
of  beet-sugar  in  the  states  of  Continental  Europe,  and  at 
the  same  time  to  obviate  the  evils  from  the  production  of 
this  commodity  in  excess  of  local  or  domestic  demand  by 
the  payment  of  bounties  on  its  exportation,  has  constituted 
such  an  extraordinary  factor  of  disturbances  in  the  world's 


syndicate  can  maintain  abnormal  prices  in  any  country  for  any  commodity 
which  is  extensively  produced  in  other  countries,  unless  it  is  itself  protected 
by  a  tariff  on  competitive  imports,  or  is  able  to  effect  the  improbable  achieve- 
ment of  inducing  the  producers  in  all  other  countries  to  enter  into  its  combi- 
nation. 

t  Such  a  formation  of  the  "  United  States  of  Europe  "—this  phrase  being 
borrowed  from  the  "Kolnische  Zeitung"— coupled  with  the  avowed  objects 
to  be  prospectively  attained  by  it,  would  have  a  peculiar  significance  for  the 
United  States  of  America,  as  the  feeling  in  Europe  in  respect  to  the  export 
trade  of  the  United  States,  especially  of  food-products,  has  not  been  and  is  not 
now  friendly.  "  The  prohibition  of  her  hog-products,  the  successive  addi- 
tions to  the  duties  on  grain  and  cattle,  and  the  readiness  with  which  any  com- 
plaint against  an  American  staple  is  taken  up  and  widely  circulated,  often  in 
a  grossly  exaggerated  form,  are  indications  of  what  would  be  the  position  of 
such  a  customs  union  toward  the  United  States,  could  it  become  an  accom- 
plished fact." 


296  RECENT  ECONOMIC  CHANGES. 

recent  economic  history  as  to  be  worthy  of  special  narration 
and  attention. 

Although  the  practice  of  stimulating  through  high  pro- 
tective duties  and  export  bounties  the  production  of  beet- 
root sugar  in  Europe  in  competition  with  the  cane-sugar 
product  of  the  tropics  dates  back  to  the  first  quarter  of  the 
century,  the  present  complicated  and  curious  state  of  affairs 
is  really  due  to  an  unexpected  result  of  the  German  method 
of  taxing  beet-sugar,  which  was  adopted  in  1869.  The  idea 
involved  in  this  method  was,  in  brief,  to  collect  an  excise  or 
internal-revenue  tax  on  all  sugar  produced ;  in  the  first  in- 
stance by  taxing  the  raw  beets,  and  subsequently  to  give  a 
drawback  on  whatever  sugar  was  exported  equivalent  to  the 
tax  paid  on  the  beets  from  which  the  sugar  was  made.  At 
the  outset  it  was  assumed  that  about  twelve  pounds  of  beets 
were  required  to  make  a  pound  of  sugar,  and  on  this  basis 
the  drawback  was  calculated ;  or  for  every  hundred- weight 
of  sugar  exported,  there  was  granted  a  drawback  of  nearly 
twelve  times  the  tax  paid  on  each  hundred- weight  of  beets. 
For  a  number  of  years  after  1869  this  arrangement  worked 
well,  the  drawback  being  about  equivalent  and  no  more 
than  the  tax.  But  nothing  stimulates  human  ingenuity  in  a 
greater  degree  than  the  prospect  of  gain  through  the  avoid- 
ance of  a  tax ;  and  gradually  a  change  in  the  condition  of 
affairs  took  place.  By  careful  and  scientific  cultivation  the 
saccharine  element  in  the  beet  was  so  much  increased  and 
the  mechanical  and  chemical  methods  of  extracting  it  so 
greatly  perfected,  that  while  in  1869  twelve  pounds  of  beets 
were  needed  in  the  average  German  factories  to  make  one 
pound  of  sugar,  in  1878  the  requisite  quantity  was  10*78 
pounds ;  in  1882,  10*08  pounds ;  in  1884,  9-28  pounds ;  and 
in  1886,  8'80  pounds.  Sugar  was  also  extracted  from  the 
beet-root  molasses,  which  was  not  taxed  at  all ;  a  result  at 
the  outset  not  anticipated,  and  even  considered  impractica- 
ble. The  effect  of  this  was  to  make  the  drawback  on  the 
exports  of  sugar  no  longer  equivalent  to  the  tax,  and  convert 


BEET-ROOT  SUGAR  BOUNTIES.  297 

it  into  a  bounty ;  or  the  exporter  received  a  drawback  as  if 
he  had  paid  an  excise-tax  on  twelve  pounds  of  beets,  when 
in  reality  he  had  paid  on  a  much  smaller  quantity — less 
than  nine  pounds  after  1885.  The  fact  that  this  bounty 
was  accruing  was  not  unknown  to  the  German  Government ; 
but  as  it  became  especially  manifest  during  the  years  1876- 
'79,  when  the  great  depression  of  industry  had  developed  a 
strong  protectionist  feeling,  nothing  was  done  to  stop  it ; 
but,  on  the  contrary,  it  was  popularly  regarded  with  satis- 
faction. Under  such  favorable  circumstances,  the  beet-root 
sugar  product  of  Germany  increased  with  great  rapidity; 
and  as  the  amount  soon  far  exceeded  any  requirements  for 
domestic  consumption,  and  as  a  net  profit  of  from  six  to 
seven  per  cent  was  guaranteed  to  the  manufactories  by  the 
export  bounties,  the  exportations  soon  assumed  gigantic 
proportions,  rising  from  about  500,000  cwt.  in  1876  to  over 
6,000,000  cwt.  in  1885.  The  other  states  of  Continental 
Europe,  finding  the  markets  for  their  own  product  of  beet- 
root sugar  everywhere  supplanted  by  the  German  sugars 
and  their  domestic  manufacturers  being  even  thereby  brought 
to  the  verge  of  ruin,  made  haste  to  follow  the  example  of 
Germany,  and  improve  upon  it,  by  offering  larger  bounties 
for  the  domestic  production  and  export  of  sugars  than  were 
offered  elsewhere ;  until  the  policy  of  Germany,  France, 
Belgium,  Holland,  Austria,  and  Russia  during  recent  years, 
seems  to  have  been  to  stimulate  their  domestic  product  of 
sugar  to  the  greatest  extent,  and  then  enter  into  competi- 
tion with  each  other  to  see  which  of  them  could  sell  cheap- 
est to  foreigners  at  the  expense  of  their  own  people ;  the 
home-grown  sugars  of  France  and  Germany,  for  example, 
gelling,  it  is  reported,  in  England  for  about  one  half  the 
prices  paid  for  the  same  article  by  the  French  and  German 
people.* 

*  In  1883-'84,  Germany,  at  an  estimated  cost  of  about  $8,000,000  in  the 
way  of  export  bounties,  exported  more  than  three  fifths  of  her  annual  product 


298  RECENT  ECONOMIC  CHANGES. 

The  Russians  determined  nearly  forty  years  ago  to  make 
their  own  sugar  out  of  the  beet-root,  and  at  first  encouraged 
their  manufacturers  with  a  specific  bounty.  Subsequently 
they  substituted  for  the  bounty  an  almost  prohibitory  duty 
on  imports,  and  under  this  system  the  production  of  beets 
and  sugar  increased  rapidly  for  many  years,  with  large  re- 
sulting profits  to  producers.  In  1881  the  Eussian  manufact- 
urers produced  just  enough  to  satisfy  the  demands  of  the 
home  market.  In  1882  there  was  an  excess  of  production. 
Prices  then  began  to  fall  and  manufacturers  to  fail.  They 
could  not  export  their  surplus  at  a  profit,  because  they  could 
not  compete  in  foreign  markets.  More  protection  at  home 
was  not  wanted,  because  the  protection  existing  was  com- 
plete. Under  these  circumstances  application  was  made  to 
the  Government  to  pay  them  for  exporting  their  surplus, 
and  this  the  Government  agreed  to  do,  to  the  extent  of  giv- 
ing a  bounty  of  one  ruble  per  pood*  on  an  exportation 
that  was  to  be  limited  to  two  million  poods,  with  a  remission 
also  of  all  internal  taxes  on  the  same.  This  arrangement 
continued  until  January,  1886,  when,  the  Russian  market 
being  overstocked  with  sugar,  an  extension  of  the  bounty 
on  an  unlimited  exportation  was  demanded,  and  granted  by 
the  Government  for  a  period  of  about  six  months,  or  until 
July,  1886.  The  result  was  that  the  Russian  exporters 
poured  upon  the  English  and  Italian  markets  (the  only 
ones  readily  available  to  them)  during  this  brief  time,  and 
to  the  great  disturbance  of  the  world's  markets,  sugar  to 
the  amount  of  seven  and  a  half  million  poods  (227,000,000 
pounds),  leaving  still  three  million  poods  surplus  at  home 
unsold  and  unsalable. 

of  beet-sugar.  Of  this  exportation  a  large  part  went  to  the  United  Kingdom, 
where  the  average  consumption  of  sugar  for  that  year  was  in  excess  of  seventy 
pounds  per  capita,  as  compared  with  an  average  of  seventeen  pounds  for  the 
population  of  Germany. 

*  The  Eussian  pood  equals  thirty-five  English  pounds,  and  the  single  sil- 
ver Eussian  ruble  may  be  reckoned  at  sixty  cents. 


SUGAR  EXPERIENCE  OF  FRANCE.  299 

The  sugar  experience  of  France  has  been  similar  to  that 
of  Germany,  but  characterized  by  some  features  of  special 
interest.  Previous  to  1884  the  excise  tax  was  levied  on  the 
manufactured  sugar,  but  since  that  year  it  has  been  assessed 
against  the  raw  material,  or  the  beet-root.  The  average 
yield  had  previously  been  5 '50  per  cent,  or  five  and  a  half  kilos 
to  one  hundred  kilos  of  root,  and  under  the  new  system  the 
yield  was  fixed  for  the  three  years  ending  on  the  31st  of  Au- 
gust, 1885,  1886,  and  1887,  for  the  purpose  of  taxation,  at 
five  or  six  per  cent  of  refined  sugar,  according  to  the  pro- 
cess of  manufacture  employed,  pressure  or  diffusion.  All 
the  surplus  yield  escaped  duty  and  formed  the  bounty.  Manu- 
facturers consequently  applied  themselves  to  obtain  beet- 
root rich  in  saccharine,  and  the  result  was  that  the  yield 
was  increased  from  five  and  a  half  per  cent  in  1884  to  7*27 
in  1885  ;  8-12  in  1886  ;  8-87  in  1887 ;  and  9-50  per  cent  in 
1888.  The  surplus  of  home-made  sugar  that  thus  escaped 
taxation  amounted  to  22-56  per  cent  of  the  total  production 
in  1885 ;  31-21  per  cent  in  1886 ;  and  36-44  per  cent  in 
1887.  In  order  not  to  place  French  colonial  sugar  at  a  dis- 
advantage, a  rebate,  first  of  twelve  per  cent,  and  afterward 
of  twenty-four  per  cent,  of  the  duty  was  made.  This  fur- 
ther increased  the  quantity  of  French  sugar  free  of  taxa- 
tion, which  rose  from  50,728  tons  in  1885  to  87,910  in  1886, 
and  184,154  tons  in  1887,  representing  in  money  a  loss  to 
the  treasury  and  a  bounty  to  the  manufacturer  of  25,364,- 
177  francs  in  1885  ;  43,955,072  francs  in  1886  ;  and  92,077,- 
278  francs  in  1887.  French  sugar-manufacturers,  to  stimu- 
late the  growers  of  beet  in  producing  a  root  rich  in  sugar,  pay 
a  premium  above  a  certain  density ;  but  it  has  been  found 
that  improvements  in  quality  can  be  obtained  only  through 
a  considerable  sacrifice  of  quantity.  By  a  law  enacted  in 
1887,  the  yield  of  sugar  liable  to  duty  was  raised  to  seven  per 
cent  for  1888,  to  increase  one  quarter  per  cent  yearly  for  four 
years,  but,  with  an  effective  yield  of  over  nine  per  cent,  a 
good  margin  now  remains  for  the  manufacturer's  bounty. 


300  RECENT  ECONOMIC  CHANGES. 

The  present  (1889)  export  bounty  in  Germany,  and  the 
annual  treasury  expenditure  in  order  that  foreigners  may 
have  cheap  sugar,  owing  to  recent  changes  in  the  law,  will 
not  probably  exceed  $4,000,000  (£800,000). 

In  Austria,  it  was  estimated  that  the  sacrifice  imposed 
by  the  sugar  bounties  cost  her  population  five  million  florins 
in  1887,  and  that  the  increase  in  the  price  of  sugar  to  do- 
mestic consumers,  in  consequence  of  the  prohibitory  import 
duties  on  foreign  sugars,  amounted  to  over  four  and  a  half 
million  additional ;  so  that  the  country  paid  nine  and  a 
half  million  florins  ($3,277,000)  in  1887  for  its  participation 
in  the  business  of  sugar  production.  For  the  year  1885-'86 
Belgium  is  reported  to  have  paid  about  $4,000,000,  and  Hol- 
land $1,500,000,  on  account  of  sugar-export  bounties.  The 
United  States,  in  this  business  of  selling  sugar  cheap  to  for- 
eigners at  the  expense  of  their  own  people,  has  also  played 
a  not  undistinguished  part,  the  exports  of  refined  sugars 
having  risen  from  22,227,000  pounds  in  1881  to  252,579,000 
pounds  in  1885,  or  26,000,000  pounds  in  excess  of  the  entire 
cane-sugar  product  of  the  country  for  the  latter  year.  The 
secret  of  this  probably  was,  that  a  bounty  was  paid  under 
the  guise  of  a  drawback,  which  the  English  sugar-refiners 
estimated  at  thirty-nine  cents  per  one  hundred  pounds. 
This  drawback  having  been  reduced  by  the  Treasury  De- 
partment to  seventeen  cents,  the  exports  for  the  succeeding 
year,  1885-'86,  at  once  fell  off  to  164,339,000  pounds,  and 
in  1888  to  only  34,449,000  pounds.  The  bounty  practically 
paid  by  the  United  States  to  the  producers  of  sugar  in  the 
Sandwich  Islands,  by  the  relinquishment  of  duties  on  all 
sugars  imported  therefrom,  while  duties  are  maintained  on 
the  import  of  sugars  from  all  other  countries,  also  amounts 
at  present  to  at  least  $6,000,000  per  annum. 

The  experiences  that  have  followed  this  attempt,  on  the 
part  of  practical  statesmen,  to  interfere  with  the  natural 
progress  and  development  of  a  great  industry,  constitute 
one  of  the  most  instructive  chapters  in  all  economic  history. 


RESULTS  OF  THE  BOUNTY  SYSTEM.  301 

Judged  from  certain  standpoints,  the  bounty  system,  as 
applied  to  beet-root  sugar,  has  been  unquestionably  most 
successful.  It  has  increased  the  aggregate  product  of  this 
variety  of  sugar  so  rapidly  that,  in  place  of  constituting 
twenty  per  cent  of  the  whole  sugar-product  of  the  world,  as 
it  did  in  1860,  it  now  represents  at  least  fifty-six  per  cent 
of  such  aggregate.  Its  artificially  increased  product  has  so 
far  exceeded  the  current  demands  of  the  world  for  consump- 
tion that  sugar  in  1886-'87  ranked  in  point  of  retail  value 
with  such  articles  as  oatmeal,  barley,  and  flour,  and  was 
used  to  some  extent  in  England  as  food  for  cattle ;  while  its 
use  as  a  fertilizer,  in  competition  with  artificial  manures, 
was  even  also  advocated.  The  average  price  of  the  raw  sugars 
imported  into  England  from  1884  to  1888,  as  officially  re- 
ported, was  13'63s.  per  cwt.,  in  comparison  with  an  average 
of  24-47s.  for  the  period  from  1869  to  1875,  and  20'97s. 
from  1879  to  1883. 

Such  a  reduction  in  the  price  of  a  prime  necessity  of  life 
has  been  of  immense  advantage  to  consumers.  In  Great 
Britain,  whose  policy  since  1874  has  been  to  give  her  people 
sugar  free  of  taxation,  the  per  capita  consumption  has  risen 
from  fifty-six  poimds  in  that  year  to  seventy-four  pounds  in 
1886  (as  compared  with  a  per  capita  of  about  fifty-four 
pounds  in  the  United  States  in  1885),  while  the  saving  to 
the  British  people,  from  the  reduction  of  the  cost  of  this 
one  item  of  their  living,  in  the  single  year  of  1884,  was  esti- 
mated by  a  committee  representing  West  India  producers, 
as  at  least  £5,000,000  ($25,000,000),  or  more  than  the  entire 
value  of  the  annual  sugar  product  of  the  West  Indies  (esti- 
mated at  £4,500,000) ;  and  at  twice  the  fixed  capital  invested 
in  sugar-refining  in  the  United  Kingdom. 

Again,  the  bounty  policy  developed  a  large  local  industry 
in  many  of  the  states  of  Continental  Europe,  and  for  a  time 
paid  enormous  profits  to  manufacturers  and  refiners  pro- 
ducing for  export.  During  the  year  1886  the  profits  of  the 
two  leading  sugar-refiners  of  France  from  export  bounties, 
H 


302  RECENT  ECONOMIC  CHANGES. 

exclusive  of  their  domestic  trade,  were  reported  as  about 
£450,000  ($2,225,000)  each;  but  how  much  of  this  they 
were  required  to  part  with  in  order  to  force,  through  reduced 
prices,  the  sales  of  their  product  in  other  countries,  is,  of 
course,  not  known.  It  is  claimed  to  have  greatly  injured 
the  sugar-refining  industry  of  Great  Britain ;  but,  on  the 
other  hand,  it  is  certain  to  have  given  a  great  impetus  to 
the  business  of  manufacturing  confectionery,  preserved 
fruits,  jams,  etc.,  in  that  country;  industries  which  have 
given  employment  to  many  more  persons  than  were  ever 
occupied  in  refining  sugar.* 

But  there  is  another  side  to  this  picture.  Under  the 
influence  of  an  extraordinary  and  artificial  stimulus  more 
sugar  has  been  produced  than  the  world  was  ready  to  absorb, 
even  at  the  reduced  prices  which  the  bounties  made  possible. 
The  price  of  beet-root,  and  therefore  of  all  sugar,  has  con- 
tinued to  decline,  until  the  sugar- industry  of  Continental 
Europe  (with  the  possible  exception  of  France)  has  experi- 
enced the  severest  depression.  Many  establishments  have 
closed  or  passed  into  bankruptcy,  and  it  is  now  well  under- 
stood that  the  only  profit  available  to  the  manufactories  is 
that  derivable  from  so  much  of  their  product  as  is  exported, 
which  in  the  case  of  Germany  represents  more  than  half  of 
the  annual  production.  In  a  recent  discussion  in  the  Ger- 

*  With  the  advantage  of  cheaper  sugar  than  any  other  commercial  nation, 
the  "jam"  industry  has  developed  in  Great  Britain  to  a  great  extent;  and 
this,  too,  notwithstanding  that  Great  Britain  is  a  country  not  especially 
adapted  to  the  growing  of  fruits,  and  in  which  domestic  fruits  are,  as  a  rule, 
costly.  According  to  Sir  Thomas  Farrer,  about  100,000  tons  (200,000,000 
pounds)  of  refined  sugar  was  used  in  this  industry  in  the  United  Kingdom  in 
1884;  employing  12,000  men,  or  more  than  double  the  number  employed  in 
the  British  sugar-refineries ;  and  for  1888  the  estimate  was  150,000  tons. 
"With  the  reduction  in  the  price  of  jam,  consequent  on  the  low  cost  of  sugar,  the 
consumption  of  jam  throughout  the  world  has  received  an  enormous  impulse ; 
and  preserves  of  every  kind — more  especially  orange  marmalade — which  were 
formerly  regarded  as  luxuries,  are  reported  as  becoming  articles  of  daily  use 
in  England  among  the  very  poorest  families,  supplanting  to  a  certain  extent 
the  use  of  butter. 


EVILS  OF  THE  BOUNTY  SYSTEM.  3Q3 

man  Keichstag,  Deputy  Heine  opposed  the  continuance  of 
the  present  bounty  system  in  that  country,  upon  the  ground 
that  it  was  disastrous  to  the  agricultural  laborer,  who  had 
been  compelled  to  sacrifice  all  his  land  to  the  beet-cultiva- 
tors. These  cultivators,  who  farmed  upon  a  large  scale,  he 
maintained,  had  effected  many  improvements  in  labor-sav- 
ing machinery,  and  thus  reduced  the  laborer's  wages  to  a 
minimum ;  so  that  in  some  districts  the  laborers  were  little 
better  off  than  serfs.  At  the  same  time  the  people  of  the 
sugar-producing  states  of  Europe  uniformly  pay  more  for 
what  proportion  of  their  own  sugars  they  consume  than  is 
paid  by  foreigners  on  the  proportion  exported.  Deputy 
Grelhert,  continuing  the  discussion,  is  reported  as  saying : 

"  I  can  not  discern  the  smallest  gain  to  our  country.  The  profits 
of  the  system  have  only  been  reaped  by  England.  It  is  German  sugar 
that  has  enabled  England  to  give  sugar  to  her  cattle ;  it  is  German 
capital  that  has  so  developed  the  English  manufacture  of  sweets,  that 
it  successfully  competes  with  the  German  manufacturer  in  the  markets 
of  the  world  and  in  Germany  itself.  We  pay  one  and  a  half  to  two 
millions  sterling  to  enable  England  to  consume  what  would  probably 
be  worked  up  by  our  German  industry.  Gentlemen,  I  fear  that  this 
system  has  made  us  the  laughing-stock  of  our  English  cousins  !  " 

In  Russia,  where  the  depression  is  extreme,  the  manu- 
facturers have  petitioned  the  Government,  but  thus  far  un- 
successfully, to  restrict  production  by  law  to  whatever  extent 
would  be  necessary  to  keep  the  price  up  to  the  point  at 
which  it  stood  when  the  domestic  product  was  just  sufficient 
to  supply  the  home  market ;  or,  in  other  words,  to  permit 
production  to  continue  at  the  producer's  discretion,  but  not 
to  allow  him  to  sell  anything  over  the  regulation  amount  in 
the  home  market. 

The  disaster  which  the  extreme  artificial  reduction  in 
recent  years  in  the  price  of  sugars  has  brought  to  other 
great  business  interests  and  to  the  material  prosperity  and 
even  civilization  of  large  areas  of  the  earth's  surface,  can 
not  also  well  be  overstated.  In  Barbadoes  (British  West 


304  RECENT  ECONOMIC  CHANGES. 

Indies),  in  February,  1887,  it  was  estimated  *  that  the  loss 
at  that  time  on  every  ton  of  sugar  produced  and  exported 
to  London  was  £1  15s. ;  and  in  the  absence  of  all  profit  on 
what  is  almost  the  sole  industry  of  the  West  Indies,  it  would 
seem  as  if  civilization  would  disappear  from  many  of  the 
islands,  as  indeed  it  already  has  in  a  great  degree  from  some 
of  them — the  island  of  Tortola,  for  example,  which  was, 
comparatively  a  few  years  ago,  the  seat  of  a  profitable  sugar- 
industry.  In  the  Spanish  islands  of  Cuba  and  Porto  Eico 
poverty  is  reported  to  be  almost  universal,  save  among  the 
large  planters  and  merchants  in  the  cities ;  and  brigandage 
has  so  greatly  increased  as  to  be  devoid  of  novelty.  Taxes 
on  the  sugar  product  of  these  islands  (mainly  through  ex- 
port duties)  have  hitherto  constituted  an  important  source 
of  revenue  to  the  Spanish  treasury ;  but  latterly  the  home 
Government,  as  a  condition  for  saving  the  planters  from 
ruin,  has  felt  obliged  to  relinquish  most  of  them.  The  sug- 
gestion has  even  been  seriously  made  that,  as  the  tobacco- 
crop  commands  good  and  increasing  prices,  the  cultivation 
of  sugar  should  be  abandoned  altogether,  and  the  islands 
converted  into  tobacco-farms.  In  Java  the  situation  of  the 
sugar-industry  has  been  so  deplorable  that,  in  order  to  save 
it  from  destruction,  with  the  consequent  throwing  of  half  a 
million  of  Javanese  laborers  out  of  employment,  and  thereby 
increasing  the  already  large  number  of  Malay  pirates,  the 
Dutch  ministry,  in  1886,  decided,  besides  making  advances 
to  planters  on  their  crops,  to  purchase  from  their  colonial 
planters  five  eighths  of  their  production  at  a  price  that  would 
entail  a  sacrifice  on  the  Dutch  treasury  of  about  40,000,000 
francs,  or  $8,000,000.  f  And  since  then  it  seems  to  have  been 

*  "  Barbadoes  Agricultural  Reporter,"  February,  1887. 

t  "  Journal  des  Fabncants  de  Sucre,"  October,  1886. 

A  further  idea  of  the  depression  of  the  sugar-trade  in  Java  may  be  gained 
from  the  fact  that  the  imports  of  raw  sugar  from  the  island  by  Holland  have 
declined— comparing  the  results  of  the  year  1870  with  those  of  1885— about 
ninety  per  cent. 


REACTIONARY  SUGAR  POLICY.  305 

well  established  that  German  beet-root  sugar  has  been  and 
is  now  exported  half  round  the  globe,  and  largely  sold  in 
Singapore,  the  center  of  the  great  sugar-producing  coun- 
tries of  Asia,  at  a  price  which  makes  its  use  to  the  manu- 
facturers of  preserved  fruits  more  advantageous  than  the 
sugars  of  Java  and  the  other  islands  of  the  Indian  Archi- 
pelago. 

In  British  India,  owing  to  the  competition  of  European 
beet-sugar,  the  exports  of  sugar,  comparing  1884  with 
1887,  experienced  a  decline  of  632,439  cwts. ;  and  a  similar 
competition  as  respects  Australia  has  threatened  with  ruin 
the  developing  sugar-industry  of  these  countries.  In  the 
island  of  Madagascar,  also,  the  manufacture  of  sugar,  which 
was  formerly  the  staple  industry,  has  become  so  unprofit- 
able, that  the  people  have  largely  abandoned  the  cultivation 
of  the  cane,  and  are  devoting  their  labor  to  the  production 
of  tea,  tobacco,  tapioca,  and  other  tropical  products. 

Finally,  the  states  of  Continental  Europe,  in  which  the 
burden  of  taxation  is  already  most  grievous,  and  in  most  of 
which  there  is  a  regular  and  increasing  annual  deficit,  are 
beginning  to  feel  that  they  can  no  longer  endure  the  strain 
upon  their  finances  which  the  bounty-paying  system  to  their 
sugar-industries  entails,  and  which  has  not  brought  pros- 
perity to  them  or  the  state.  In  this  reaction,  Kussia  has 
taken  the  lead,  and  with  the  exception  of  bounties  granted 
for  a  period  of  five  years  on  the  export  of  sugars  to  Persia, 
has  abolished  her  former  general  system  of  bounties ;  and 
all  the  other  states  of  Continental  Europe  exhibit  unmistak- 
able evidences  of  a  desire  to  follow  her  example.  It  is  gen- 
erally agreed  in  Europe  that  not  only  have  the  fiscal  results 
of  the  bounty  system  been  wholly  unsatisfactory  to  the 
several  sugar-producing  states,  but  also  that  the  bounties 
have  enabled  foreign  consumers  to  obtain  sugar  at  less  than 
its  actual  cost  of  production.  Competition  among  the  re- 
finers has  compelled  them  to  share  their  bounties  with 
their  customers,  and  their  own  have  been  compelled  to  pay 


306  RECENT  ECONOMIC  CHANGES. 

prices  abnormally  high,  in  order  that  foreigners  might  buy 
at  prices  abnormally  low. 

Recent  investigations  have  also  developed  this  curious 
feature  of  this  sugar-bounty  question,  and  that  is,  that  the 
country  paying  the  heaviest  export  bounty  does  not  export 
the  greatest  quantity.  Thus  France,  with  a  reported  annual 
production  of  550,000  tons,  and  paying  a  much  higher 
bounty  than  Germany,  exports  twenty-nine  per  cent  of  her 
product;  while  Germany,  with  an  annual  production  of  about 
a  million  tons,  and  paying  a  much  smaller  bounty,  exports 
sixty-one  per  cent  of  her  product. 

It  is  furthermore  recognized  that,  while  a  bounty  un- 
naturally stimulates  the  production  of  sugar,  it  also  operates 
to  a  like  extent  in  discouraging  production  where  no  bounty 
is  given ;  and  that,  if  the  bounty  system,  is  continued  long 
enough,  it  will  in  a  great  measure  destroy  natuf  al  production. 

The  great  difficulty  of  the  situation,  however,  is  that 
much  of  the  sugar-industry  that  has  been  called  into  exist- 
ence artificially  would  be  immediately  ruined,  with  great 
loss  and  suffering  to  a  large  number  of  people,  if  the  bounties 
were  at  once  discontinued ;  and  the  same  result  would  follow 
by  the  putting  an  end  to  any  possibility  of  exporting,  if  one, 
or  all  but  one,  of  the  states  should  cease  paying  bounties, 
and  one,  like  France,  should  continue  to  do  so. 

An  invitation  extended  by  the  British  Government,  in 
1887,  to  the  various  sugar-producing  nations,  to  meet  in 
conference  through  their  representatives,  "  with  a  view  of 
arriving  at  a  common  understanding  for  the  suppression  of 
(export)  duties,"  was  therefore  promptly  accepted ;  and  in 
November  of  that  year  such  a  conference  assembled  in 
London,  at  which  officially  appointed  delegates  from  Ger- 
many, Austria,  Belgium,  Sweden,  France,  Denmark,  Spain, 
Great  Britain,  Italy,  the  Netherlands,  Eussia,  and  Brazil 
were  present  and  participated.*  The  results  of  the  first 

*  The  United  States  was  invited  to  send  delegates,  but  no  action  was  taken 


CONFERENCE  FOB  SUPPRESSION  OF  BOUNTIES.    307 

meeting  were  a  unanimous  condemnation  of  the  system  of 
bounties ;  and  the  adoption  of  a  convention  for  submission, 
with  a  view  of  ratification,  to  the  respective  governments,  of 
which  the  following  was  the  first  article : 

"  The  high  contracting  parties  engage  to  take  such  measures  as 
shall  constitute  an  absolute  and  complete  guarantee  that  no  open  or 
disguised  bounty  shall  be  granted  on  the  manufacture  or  exportation 
of  sugar." 

The  conference  reassembled  in  August,  1888,  at  which 
meeting  a  further  convention  was  drafted,  embodying 
methods  for  practically  enforcing  the  object  of  the  confer- 
ence ;  the  main  features  of  which  were  that  the  contracting 
powers  should  exclude  from  their  territories  all  sugar  and 
sugar  products  that  have  been  benefited  by  either  open  or 
disguised  bounties ;  such  exclusion  to  be  effected,  either  by 
direct  prohibition,  or  by  the  levying  of  duties  in  excess  of 
the  bounties;  and  that  beet-root  sugars  intended  for  ex- 
portation should  be  manufactured  in  bond.  To  this  propo- 
sition the  representatives  of  England,  Germany,  Spain,  Italy, 
and  Russia  agreed.  Of  other  countries',  the  United  States 
did  not  participate  ;  Belgium  was  not  satisfied  with  the 
idea  of  manufacturing  in  bond  for  exportation ;  Austria  and 
France  reserved  their  concurrence  until  all  other  sugar  pro- 
ducing and  consuming  countries  agreed  to  adhere ;  Den- 
mark and  Sweden  refused  to  sign  absolutely ;  Brazil  reserved 
her  freedom  of  action. 

As  unanimity  of  action  is  clearly  essential  to  the  success- 
ful working  of  any  international  agreement  for  the  suppres- 
sion of  the  sugar-bounty  system,  and  as  no  such  agreement 
has  thus  far  been  attained,  or  seems  possible — public  opin- 
ion in  Great  Britain,  for  example,  being  apparently  very 
adverse  to  the  indorsement  of  the  recommendations  of  the 
British  representatives  at  the  conference — the  efforts  of  the 

in  response  further  than  the  authorization  of  the  secretary  of  the  legation  at 
London  to  attend  the  convention,  without  participation  in  the  proceedings. 


308  RECENT  ECONOMIC  CHANGES. 

conference  to  effect  a  result  which  it  had  unanimously  de- 
clared was  most  desirable,  appear  at  present  to  have  been 
wholly  ineffectual.  But  as  final  action  on  the  part  of  the 
states  represented  in  the  conference  is  deferred  until  Sep- 
tember, 1891,  further  experiences  may  remove  obstacles  that 
now  appear  insurmountable.*  The  fact  that  the  people  of 
Great  Britain — which  neither  imposes  taxes  nor  pays  boun- 
ties on  sugar — consume  more  sugar  per  capita  than  the 
people  of  any  other  country  in  the  world  —  namely,  74 
pounds — while  the  people  of  those  countries  which  have  en- 
deavored to  artificially  encourage  the  production  and  con- 
sumption of  sugar,  consume  comparatively  small  amounts 
per  capita — namely,  in  the  case  of  France,  28  pounds ;  Ger- 
many, 20f  pounds ;  Austria,  14^  pounds ;  Eussia,  9  pounds ; 
Italy,  8  pounds ;  Holland,  28|  pounds ;  and  Spain,  9£ 
pounds — would  seem  furthermore  to  amount  to  a  demon- 
stration, that  the  most  certain  way  of  providing  for  the 
greatest  consumption  of  sugar,  and  of  speedily  relieving  the 
world's  markets  of  any  over-production  of  this  most  desirable 
commodity,  would»be  for  governments  to  refrain  to  the 
greatest  possible  extent  from  all  interferences  with  its  pro- 
duction and  distribution. 

*  The  clause  of  the  treaty  adopting  stringent  provisions  against  the  viola- 
tion of  its  provisions  "  is  a  new  departure  in  international  agreements,  and  its 
exact  terms  will  be  fully  scrutinized  in  all  countries.  The  expediency  of  some 
compulsion  of  this  nature  seems  to  have  been  admitted  by  all  the  delegates, 
including  those  of  France  ;  but  it  would  seem  a  question  how  far  the  exclu- 
sion by  us  of  the  sugar,  say,  of  France,  would  be  compatible  with  our  existing 
treaty  engagement  to  extend  to  her  the  most-favored-nation  treatment,  and  it 
is  difficult  to  see  how  our  Government,  which  has  always  declined  to  impose 
differential  duties  upon  sugar,  can  now  go  to  such  a  far  greater  length  in  dif- 
ferentiating as  wholly  to  exclude  the  products  of  some  countries  while  opening 
our  ports  freely  to  sugar  from  all  other  quarters.  We  might  as  well  exclude 
from  our  ports  all  foreign  ships  which  receive  bounties  from  their  governments, 
and  all  the  goods  which  such  ships  carry.  In  fact,  if  once  we  admit  the  prin- 
ciple that  it  is  right  to  fight  bounties  by  customs  duties  or  regulations,  we 
commit  ourselves  to  a  policy  of  commercial  reprisals,  and  upon  such  a  policy 
it  would,  in  our  opinion,  be  the  height  of  folly  for  us  to  enter." — London 
Economist. 


BOUNTIES  FOE  SHIPPING.  309 

To  bring  up  the  narrative  of  this  curious  chapter  in  the 
world's  economic  experience  to  the  present  date  (1889),  it 
is  to  be  added  that,  owing  to  a  reduction  in  the  produc- 
tion of  sugar  through  the  discouragement  of  the  low  prices 
which  the  bounty  system  has  occasioned,  conjoined  with 
an  unfavorable  season,  and  an  increasing  consumption  con- 
sequent on  an  increasing  population,  the  world  finds  itself 
threatened  for  a  time  (1889)  with  a  temporary  scarcity  of 
sugar.  Prices,  accordingly,  have  greatly  advanced,  with  a 
prospective  outlook  for  another  year  of  increased  produc- 
tion, and  a  repetition  of  price  disturbances  in  the  not-dis- 
tant future. 

It  is  also  interesting  to  note  that,  notwithstanding  the 
experience  of  the  sugar  bounties,  the  Government  of  the 
Argentine  Republic,  while  the  sugar  convention  was  pend- 
ing, determined  to  appropriate  an  annual  sum  of  $550,000 
for  three  years,  in  order  to  stimulate  the  export  trade  of  that 
country  in  beef  and  mutton  for  the  European  market. 

BOUNTIES  FOR  SHIPPING. — The  recent  experience  of 
France  in  attempting  to  stimulate  ship-building  and  ship- 
using,  through  a  carefully-devised  system  of  subsidies  and 
bounties,  furnishes  another  illustration  of  the  effect  of  gov- 
ernmental interference  with  the  natural  course  of  industries, 
second  in  importance  only  to  that  afforded  by  the  experience 
of  sugar. 

Thus,  to  accomplish  the  purpose  above  noted,  the  French 
Government  offered  in  1881  to  give  a  bounty  of  twelve  dol- 
lars a  ton  on  all  ships  built  in  French  yards  of  iron  and 
steel ;  and  a  subsidy  of  three  dollars  per  ten  tons  for  every 
thousand  miles  sailed  by  French  vessels ;  and  as  they  did 
not  desire  to  put  any  inhibition  on  the  citizens  of  France 
buying  vessels  in  foreign  countries  and  making  them  French 
property,  in  case  they  desired  to  do  so,  they  proposed  to 
give  one  half  the  latter  subsidy  to  vessels  of  foreign  con- 
struction bought  by  citizens  of  France  and  transferred  to 
the  French  flag. 


310  RECENT  ECONOMIC  CHANGES. 

At  the  outset,  as  was  the  case  with  the  sugar  bounties, 
the  scheme  worked  admirably.  New  and  extensive  steam- 
ship lines  were  organized  with  almost  feverish  haste,  and  the 
construction  of  many  new  and  large  steamers  was  promptly 
commenced  and  rapidly  pushed  forward  in  various  French 
ports,  and  also  in  the  ship-yards  of  Great  Britain  and  other 
countries.  The  Government  paid  out  a  large  amount  of 
money,  and  it  got  the  ships.  In  two  years  their  tonnage 
increased  from  a  little  over  300,000  to  nearly  700,000  tons 
for  steamers  alone ;  while  the  tonnage  engaged  on  long  voy- 
ages increased  in  a  single  year  from  3,600,000  to  over  4,700,- 
000  tons. 

It  was  probably  a  little  galling  to  the  French  to  find  out 
after  two  years'  experience  that  most  of  the  subsidies  paid 
by  the  Government  were  earned  by  some  two  hundred  iron 
steamers  and  sailers,  and  that  over  six  tenths  of  these  were 
built  and  probably  owned  in  large  part  in  Great  Britain ; 
so  that  the  ship-yards  on  the  Clyde  got  the  lion's  share  of 
the  money.  But  as  all  the  vessels  were  transferred  to  and 
sailed  under  the  French  flag,  and  were  regarded  as  belong- 
ing to  the  French  mercantile  marine,  everything  seemed  to 
indicate  that  the  new  scheme  was  working  very  well,  and 
that  the  Government  had  really  succeeded  in  building  up 
the  shipping  of  France.  But  the  trouble  was  that  the 
scheme  did  not  continue  to  work.  The  French  soon  learned 
by  experience  the  truth  of  the  economic  maxim  that  ships 
are  the  children  and  not  the  parents  of  commerce ;  and  that 
while  it  was  easy  to  buy  ships  out  of  money  raised  by  tax- 
ation, the  mere  fact  of  the  ownership  of  two  or  three  hun- 
dred more  ships  did  no  more  to  increase  trade  than  the  pur- 
chase and  ownership  of  two  or  three  hundred  more  plows 
necessarily  increased  to  a  farmer  the  amount  of  arable  land 
to  plow ;  or,  in  other  words,  the  French  found  that  they  had 
gone  to  large  expense  to  buy  a  new  and  costly  set  of  tools, 
and  then  had  no  use  for  them. 

And,  what  was  worse,  they  found,  furthermore,  that 


SHIPPING  EXPERIENCE  OP  FRANCE.  3H 

while  they  had  not  increased  trade  to  any  material  extent, 
they  had  increased  the  competition  for  transacting  what 
trade  they  already  possessed.  The  result  has  been  that 
many  French  shipping  companies  that  before  the  subsidy 
system  were  able  to  pay  dividends  were  no  longer  able ; 
fortunes  that  had  been  derived  from  the  previous  artificial 
prosperity  have  melted  away,  and  the  French  mercantile 
marine  ceased  to  grow — only  $584,288  being  paid  out  for 
construction  bounties  in  1886,  as  compared  with  a  disburse- 
ment of  $982,673  in  1882.*  In  fact,  the  whole  scheme 
proved  so  disastrous  a  failure  that  the  late  Paul  Bert,  the 
eminent  French  legislator  and  orator,  in  a  speech  in  the 
French  Assembly,  seriously  undertook  to  defend  the  French 
war  of  invasion  in  Tonquin  on  the  ground  that  its  continu- 
ance would  afford  employment  for  the  new  French  mercan- 
tile marine,  which  otherwise,  we  have  a  right  to  infer,  in 
his  opinion  would  have  remained  idle.  A  recent  writer — 
M.  Raffalovich — in  the  "Journal  des  Economistes,"  has 
also  thus  summed  up  the  situation.  "  It  may  be  asserted," 
he  says,  that 

"  the  bounty  system  in  France,  which  was  intended  to  bridge  over 
a  temporary  depression,  has  aggravated  the  situation,  and  has  proved 
itself  to  be  a  source  of  mischief,  not  of  cure." 

The  experience  of  the  mercantile  marines  of  Europe 
during  recent  years  affords  the  following  curious  results: 
It  shows,  first)  that  the  payment  of  bounties  has  practically 
availed  nothing  in  arresting  the  continued  decrease  in  sail- 
ing-tonnage ;  second^  that  in  the  eight  years  prior  to  1880, 
French  shipping,  in  its  most  valuable  branch-steamers,  in- 
creased faster  than  the  shipping  of  any  of  its  Continental 
competitors ;  but  after  1880,  the  increase  in  the  steam  ma- 
rine of  Germany,  where  no  bounties  were  paid,  was  relatively 
greater  both  in  number  and  tonnage  of  vessels  than  in 

*  The  total  amount  paid  by  France  for  the  construction  and  running  of 
ships  is  estimated  to  have  been  10,583,965  francs  in  1887,  and  9,000,000  in  1888. 


312  RECENT  ECONOMIC  CHANGES. 

France  where  large  bounties  were  given  after  1881 ;  and 
was  also  greater  as  respects  the  aggregate  tonnage  of  all 
vessels — sail  and  steam.  The  obvious  expectation  of  the 
French  Government  in  resorting  to  the  bounty  system  for 
shipping  was  that  ships  built  and  navigated  with  the  aid  of 
the  bounties  would  carry  French  manufactures  into  foreign 
countries,  and  thus  open  new  markets  for  domestic  prod- 
ucts. But  experience,  thus  far,  has  shown  that  all  that  has 
been  effected  is  a  transfer,  to  some  extent,  of  the  carriage  of 
goods  formerly  brought  in  foreign  vessels  to  French  vessels. 
But,  on  the  other  hand,  the  increase  of  tonnage,  under  the 
stimulus  of  the  bounties,  beyond  the  requirements  of  traffic, 
and  the  consequent  reduction  of  freights,  has  entailed  "  a 
loss,  and  not  a  gain  to  the  French  nation ;  by  throwing 
upon  it  the  burden  of  a  shipping  interest  that,  but  for  the 
Government  aid,  would  have  been  unprofitable,  and  which, 
because  of  such  aid,  can  not  conform  itself  to  the  demands 
of  trade."  *  The  experience  of  Austria-Hungary  in  attempt- 
ing to  find  new  outlets  for  their  produce,  or  fresh  employ- 

*  "  Report  on  the  Mercantile  Marines  of  Foreign  Countries,"  by  Worthing- 
ton  C.  Ford,  U.  S.  Department  of  State,  Executive  Documents,  1886. 

A  report  (1889)  to  the  British  House  of  Commons  affords  the  latest  infor- 
mation respecting  the  payment  of  bounties  in  European  countries  with  a 
view  to  favoring  the  construction  and  running  of  ships.  It  appears  that  such 
payments  are  made  in  France,  Italy,  and  Spain.  In  France  the  annual  outlay 
on  bounties  for  construction  is  officially  reported  to  have  been  £181,620 
($982,673)  in  1882,  and  £120,224  ($584,288)  in  1886.  The  sums  allowed  by 
France  for  navigation  depend  upon  the  age  of  the  vessel  and  the  materials 
used  in  construction.  The  amount  of  bounties  for  navigation  paid  in  1886 
was  7,578,347  francs.  In  Italy,  for  1887,  the  following  amounts  were  paid 
by  the  Government :  namely,  for  construction  of  vessels,  £4,587 ;  for  repairs, 
£7,210 ;  for  importing  coal,  £6,931 ;  for  navigation — steamers,  £44,956 ; 
sailing-vessels,  £96,289 ;  total,  £159,973.  In  Spain  the  bounty  is  32s.  per  ton 
paid  to  Spanish  ship-builders  on  vessels  constructed  by  them.  In  Spain,  and 
also  in  Austria  and  Belgium,  materials  used  in  ship-building  are  exempted 
from  payment  of  customs  duties.  No  statement,  however,  is  supplied  as  to 
the  actual  or  estimated  amount  of  the  aid  thus  afforded  to  the  construction  of 
vessels  in  the  three  countries  last  named.  Postal  subsidies  are  granted  in 
almost  all  European  states;  but  these  payments  can  not  be  reckoned  as 
bounties. 


INCREASE  IN  BRITISH  TRADE.  313 

ment  for  their  shipping  by  the  payment  of  subsidies,  has 
been  analogous  to  that  of  France,  and  equally  unfortunate. 
The  steamers  <3f  the  Austrian  Lloyd  Company  have  made 
more  voyages  to  the  "  Far  East "  than  when  unsubsidized  ; 
but  the  exports  of  Austrian  products  have  not  materially 
increased,  while  the  mercantile  marine  generally  of  Austria 
is  rapidly  declining. 

The  experience  of  Great  Britain,  occcupying,  as  she  has, 
the  position  of  being  the  only  country  in  the  world  of  large 
production  and  commerce  which  has  not  within  recent  years 
imposed  restrictions  on  the  competitive  sale  of  foreign  prod- 
ducts  in  her  markets,  is  also  exceedingly  interesting  and 
instructive.  That  British  trade  and  production  have  been 
injured  by  attempts  in  the  nature  of  forced  sales  on  the 
part  of  competitors  in  protected  countries  to  dispose  of  their 
surplus  products  in  the  English  duty-free  markets — while 
the  tariffs  of  their  own  countries  have  shielded  them  from 
reprisals — and  that  from  like  causes  Great  Britain  has  ex- 
perienced severe  foreign  competition  in  neutral  markets, 
where  British  trade  had  formerly  almost  exclusive  posses- 
sion, can  not  be  doubted.  Thus,  the  report  of  the  British 
Commission  "  On  the  Depression  of  Trade  and  Industry  " 
(1886)  shows  that  the  importation  of  foreign  manufactured 
or  partially  manufactured  goods  into  Great  Britain  has  in- 
creased since  1870,  at  "  a  slightly  more  rapid  rate  "  than  the 
increase  of  its  population,  having  been  £1.97  per  head  in  the 
period  1870-'74,  and  £2.35  per  head  in  the  period  1880-'84. 
The  extent  of  the  injury  to  British  interests  from  these 
changes  in  the  conditions  of  the  world's  trade  does  not, 
however,  appear  to  have  been  as  great  as  might  have  been 
anticipated,  or  as  is  popularly  supposed,  and  very  curiously 
has  manifested  itself  in  a  reduction  of  profits,  rather  than 
in  any  reduction  of  the  volume  of  British  trade ;  the  value 
of  British  exports  to  the  six  protectionist  countries  of  the 
world — the  United  States,  France,  Germany,  Russia,  Spain, 
and  Italy — having  been  larger  during  the  years  1880-'84 


314  RECENT  ECONOMIC  CHANGES. 

than  in  any  quinquennial  period  of  British  history,  with  the 
exception  of  the  period  from  1870-'74,  when  British  trade 
is  known  to  have  been  abnormally  inflated.  *  Thus  the  aver- 
age annual  value  of  British  and  Irish  produce  exported  to 
France,  Germany,  Spain,  Italy,  Eussia,  and  the  United 
States  was  £2  26  per  head  of  her  population  in  1880-'84, 
as  compared  with  $2  06  in  1875-'79,  and  £2  18  for 
1865-'69.  Of  the  total  increase  in  the  shipping  trade  of  the 
principal  maritime  nations  from  1878  to  1887,  one  third 
occurred  in  British  tonnage ;  while  of  the  increase  in  the 
merchant  steam  tonnage  of  different  countries,  during  the 
same  period,  nearly  two  thirds  is  to  be  credited  to  Great 
Britain.  In  the  year  1887  the  mercantile  navy  of  Great 
Britain,  while  carrying  three  fourths  of  the  whole  of  her 
own  immense  commerce,  carried  at  the  same  time  one  half 
of  that  of  the  United  States,  Portugal,  and  Holland  ;  nearly 
one  half  of  that  of  Italy  and  Eussia ;  and  more  than  one 
third  of  that  of  France  and  Germany.  As  the  ocean  mer- 
cantile tonnage  of  the  United  States  declined  between  the 
years  1878  and  1887  in  a  greater  degree  than  that  of  any 
other  country,  it  is  very  clear  at  whose  expense  the  increase 
in  the  shipping  of  other  nations  was  made  during  this 
same  period.  It  is  also  not  a  little  interesting  to  note  that 
the  countries  of  the  world  in  which,  according  to  the  most 
recent  and  accepted  statistics,  the  ratio  of  wealth  and  the 
ratio  of  foreign  commerce  to  the  population  are  the  greatest, 
are  Holland  and  Great  Britain,  the  two  states  that  have 
emancipated  themselves  in  the  greatest  degree  from  all  re- 
strictions on  the  interchange  of  products  with  foreign  na- 
tions— the  customs  revenue  of  the  former  amounting  to 
about  one  per  cent  on  her  imports,  and  that  of  the  latter  to 
about  five  and  a  half  per  cent.*  In  India,  also,  where  there 

*  It  is  popularly  believed  that  the  per  capita  wealth  of  the  people  of  the 
United  States,  which  the  census  of  1880  fixed  at  $860— but  which,  allowing 
for  duplications,  is  probably  not  over  $500 — is  greater  than  that  of  any  other 
people.  This,  however,  is  not  the  fact ;  the  ratio  of  wealth  to  each  inhabitant 


COMPARATIVE  EXPORTS  OP  EUROPE.  315 

are  few  artificial  restrictions  on  the  freedom  of  exchange, 
internal  trade,  manufactures,  and  foreign  commerce  have 
increased  in  an  extraordinary  degree  within  recent  years, 
and  the  wages  of  skilled  labor  have  also,  at  the  same  time, 
notably  advanced. 

An  analysis  of  the  comparative  values  of  the  export 
trade  of  the  nations  of  Europe  during  the  five  years  from 
1880-'85 — a  period  of  intense  struggle  for  the  domination  of 
the  world's  markets — affords  the  following  significant  re- 
sults :  In  cotton  and  woolen  yarns  and  dry-goods,  England 
strengthened  her  position;  in  iron  and  steel  goods,  her 
share  of  the  world's  trade  increased  from  64*2  to  66-5  per 
cent ;  while  in  machinery  her  exports  were  pushed  up  from 
66'7  to  69-1  per  cent.  In  glass  and  glass  goods  England's 
percentage  remained  constant,  while  that  of  France  and 
Belgium  declined.  Germany  increased  her  exports  of  glass 
and  glassware,  and  also  very  largely  of  paper  and  slightly 
of  machinery,  losing  ground  in  respect  to  the  exportation 
of  iron  and  steel  goods,  in  common  with  France  and  Aus- 
tria. In  leather  and  leather  goods  Germany  leads,  while 
France  appears  to  be  rapidly  losing  her  former  supremacy. 

Apart,  however,  from  their  bearing  on  any  particular 
country,  a  review  of  all  the  circumstances  connected  with 
the  multiplication  of  restrictions  on  international  commerce, 
which  the  majority  of  civilized  nations  have  united  in  cre- 
ating in  recent  years,  fully  justifies  the  British  Commission 
and  other  European  authorities  in  regarding  it  as  a  most 
influential  agency  in  occasioning  almost  universal  economic 
disturbance.  It  has  been  progress  backward — progress  in 
the  direction  of  that  sentiment  of  the  middle  ages,  which 

in  Great  Britain  being  $1,245,  and  in  Holland,  $1,200.  The  wealth  of  Hol- 
land, moreover,  doubled  in  the  twenty  years  next  prior  to  1880,  while  the 
gain  in  population  of  the  country  during  the  Bamo  period  was  comparatively 
insignificant.  In  respect  to  commerce,  the  ratio  to  each  inhabitant,  in  1880» 
was  $150  in  Holland,  as  compared  with  $91  for  Great  Britain,  and  $32  for 
the  United  States. 


316  RECENT  ECONOMIC  CHANGES. 

held  that,  as  commerce  benefited  one  country  only  as  it 
injured  some  other,  it  was  the  duty  of  every  country  to  im- 
pose the  most  harassing  restrictions  on  its  commercial  inter- 
course. The  evidence,  furthermore,  is  overwhelming  that, 
as  civilization  grows  more  complex,  and  the  use  and  per- 
fection of  machinery  increases,  all  obstacles  placed  in  the 
way  of  the  freest  interchange  of  commodities  have  an  in- 
creasingly disastrous  effect  in  deranging  and  destroying  in- 
dustry everywhere.  Or,  in  other  words,  increased  knowl- 
edge respecting  the  forces  of  Nature,  and  a  wonderful  sub- 
ordination and  use  of  the  same  having  greatly  increased  and 
cheapened  the  abundance  of  all  useful  and  desirable  things, 
the  majority  of  the  world's  legislators  and  statesmen  have 
seemed  to  have  considered  it  incumbent  upon  them  to  neu- 
tralize and  defeat  the  beneficent  results  of  such  abundance. 
And  the  most  comforting  assurance  that  progress  will  not 
continue  to  be  made  in  this  same  direction,  is  to  be  found  not 
so  much  in  the  intelligence  of  the  masses  or  their  rulers,  as 
in  the  circumstance  that  existing  restrictions  on  commerce 
can  not  be  much  further  augmented  without  such  an  im- 
pairment of  international  trade  as  would  be  destructive  of 
civilization. 

As  the  existing  restrictions  on  commercial  intercourse 
within  recent  years  have  not  been  all  imposed  at  one  time, 
but  progressively,  and  as  their  influence  has  accordingly 
been  gradual,  the  world  does  not,  however,  seem  to  have  as 
yet  fully  appreciated  the  extent  to  which  the  exchange  of 
products  between  nations  has  been  thereby  interrupted  or 
destroyed.  But,  as  the  case  now  stands,  Eussia  practically 
prohibits  her  people  from  any  foreign  purchases  of  iron 
and  steel,  and  in  fact  seems  to  desire  to  limit  exchanges  of 
her  products  for  the  products  of  all  other  nations  to  the 
greatest  extent  possible.  Germany,  by  repeated  enactments 
since  1879,  has  imposed  almost  prohibitory  duties  on  the 
importation  of  wheat ;  a  measure  directed,  in  the  first  in- 
stance, against  Eussia,  as  a  means  of  retaliation  for  the  per- 


ILLUSTRATIONS  OF  TRADE  RESTRICTIONS.       317 

secution  of  German  landed  proprietors  in  Poland,  but  which 
has  severely  damaged  the  German  steam  flour  industry,  and 
benefited  no  one.  Austria  imposes  heavy  tariff  rates  on  the 
import  of  almost  all  German  manufactures.  Belgium  pre- 
vents the  importations  of  cattle  and  meats ;  Austria,  Russia, 
Germany,  France,  Belgium,  and  Holland,  of  sugar ;  France, 
of  pork  and  pork  products ;  Brazil,  of  rice ;  while  trade  be- 
tween Italy  and  France  has  been  interrupted  to  almost  as 
great  a  degree  as  mutual  governmental  action  will  admit. 

The  imports  of  Russia,  as  before  pointed  out,  decreased 
forty-three  per  cent  in  the  four  years  from  1883  to  1887 ; 
and  in  the  case  of  no  one  of  the  Continental  states  of  Europe 
has  the  condition  of  their  foreign  trade  in  recent  years  been 
regarded  as  satisfactory.  For  the  year  1888  there  was  a 
decline  in  the  exchanges  of  every  such  state  with  foreign 
countries  ;  or,  what  is  the  same  thing,  there  was  a  greater 
restriction  to  each  one  of  them  of  markets  for  the  indus- 
trial products  of  their  own  people.  The  avowed  policy  of 
the  United  States  has  for  years  been  to  prohibit  or  obstruct 
trade  on  the  part  of  her  citizens,  in  respect  to  many  articles, 
with  the  citizens  of  all  foreign  countries ;  and  with  this 
example,  and  in  part  from  a  spirit  of  retaliation,  there  can 
be  no  doubt  that  the  objective  of  much  of  the  restrictive 
commercial  legislation  of  other  countries  in  recent  years 
has  been  the  United  States — a  policy  which  has  notably 
affected  the  agricultural  supremacy  of  the  latter  country  in 
the  world's  markets ;  the  exports  from  the  United  States, 
comparing  1888  with  1881,  of  cattle,  having  declined  24-5  in 
quantity  and  nineteen  per  cent  in  value ;  of  hog-products, 
43-3  in  value ;  and,  of  dairy  products,  over  fifty  per  cent  in 
value.  The  decline  in  the  value  of  the  exports  of  the  United 
States  to  France  has  been  especially  noteworthy,  namely, 
from  a  value  of  $99,000,000  in  1880  to  $40,000,000  in  1886, 
and  $37,780,000  in  1888. 

Great  Britain  alone  of  all  the  nations,  in  increasing  her 
territorial  possessions,  does  not  take  to  herself  any  com- 


318  RECENT  ECONOMIC  CHANGES. 

mercial  privileges  which  she  does  not  readily  and  equally 
share  with  the  people  of  all  other  countries. 

In  all  discussions  as  to  the  expediency  of  imposing  taxes 
on  imports  with  a  view  of  protecting  domestic  industries,  the 
question  as  to  the  amout  of  indirect  taxation  thereby  actu- 
ally entailed  through  augmentation  of  prices  on  the  con- 
sumers of  protected  products  constitutes  a  most  important 
and  interesting  feature.  Many  estimates  of  the  incidence 
and  extent  of  such  taxes — which  consumers  pay,  but  which 
the  Government  does  not  receive — have  from  time  to  time 
been  made,  especially  in  the  United  States ;  but  in  the  ab- 
sence of  sufficiently  precise  and  unquestionable  data  they 
have  not  been  generally  regarded  as  satisfactory,  and  as  a 
reality  are  often  even  unqualifiedly  denied.  The  publica- 
tion during  the  year  1888,  under  the  auspices  of  the  Ameri- 
can Iron  and  Steel  Association,  of  a  complete  collection  of 
the  statistics  of  the  iron  and  steel  industries  of  the  United 
States,  for  many  years  down  to  the  close  of  1887,  embracing 
both  production  and  prices,  with  the  concurrent  prices  of 
British  iron  and  steel  from  1830  to  1887,*  affords,  however, 
data  so  exact,  as  to  permit  the  relative  prices  or  cost  of  iron 
and  steel  to  the  consumers  of  these  metals  in  the  United 
States  and  Great  Britain  for  the  years  from  1878  to  1887 
inclusive,  to  be  clearly  exhibited  ;  and  the  amount  of  indi- 
rect taxation  paid  by  the  people  of  the  former  country  in 
the  form  of  increased  prices  contingent  on  the  duties  levied 
on  their  importations  of  iron  and  steel,  to  be  computed  with 
undoubted  accuracy. 

The  average  annual  consumption  of  iron  and  steel  in 
the  United  States,  in  one  form  or  another,  during  the  ten 
years  1878  to  1887  inclusive,  was  6,000,000  tons  of  2,000 

*  "  A  Collection  of  Statistics  to  the  Close  of  1887,  relating  to  the  Iron  and 
Steel  Industries  of  the  United  States  ;  to  which  is  added  much  Valuable  Sta- 
tistical Information  relating  to  the  Iron  and  Steel  Industries  of  Great  Britain, 
etc.,"  by  JAMES  M.  SWANK,  General  Manager  of  the  American  Iron  and  Steel 
Association,  Philadelphia,  1888,  8vo  pp.  24. 


PRICES  OF  IRON  IN  THE  UNITED  STATES.       319 

pounds  each,  or  a  fraction  less  than  thirty  per  cent  of  the 
world's  entire  product  of  iron.  For  the  year  1887  the  con- 
sumption was  more  extraordinary — about  9,270,000  tons,  or 
a  fraction  less  than  forty  per  cent  of  the  world's  product ; 
the  domestic  product  of  pig-iron  amounting  to  7,187,000 
tons.  The  average  product  of  pig-iron  in  Great  Britain 
for  the  same  period,  1878  to  1887,  was  a  little  less  than 
8,400,000  net  tons ;  and  her  product  for  1887  corresponded 
very  closely  to  the  average  of  the  whole  period.  It  there- 
fore appears  that  the  consumption  of  iron  and  steel  in  the 
United  States  for  the  ten  years  in  question,  was  equal  to 
seventy-five  per  cent  of  the  average  product  of  Great  Brit- 
ain in  that  period ;  and  at  the  present  time  is  nearly  equal 
to  her  entire  product.  As  no  other  country  than  Great 
Britain  exports  any  quantity  of  iron  and  steel  that  bears 
any  important  proportion  of  the  present  total  consumption 
of  the  United  States,  nearly  every  other  country  importing 
more  iron  than  it  exports,  it  would  be  obviously  impossible, 
therefore,  for  the  United  States  to  procure  their  necessary 
supply  of  these  metals,  except  from  their  own  mines. 

From  1878  to  1887  inclusive,  the  average  price  of  an- 
thracite foundry  pig  in  Philadelphia  was  $21.87  per  ton. 
For  the  same  period,  the  average  (home)  price  of  "  Scotch  " 
pig  was  $12.94;  or,  making  an  ample  allowance  for  freights, 
a  fraction  under  $15  per  ton  when  landed  in  the  United 
States.  Deducting  this  from  the  price  of  anthracite  foundry 
iron,  as  above  stated,  there  was  a  disparity  in  price  on  all  the 
pig-iron  consumed  in  the  United  States  during  the  ten  years 
named,  of  seven  dollars  per  ton  in  excess  of  the  average 
concurrent  market  price  of  pig-iron  in  Great  Britain. 

If  objection  is  made  to  the  quality  of  iron  above  selected 
for  examination,  a  comparison  of  the  relative  prices  of  the 
higher  grades  will  afford  results  even  more  significant. 
Thus,  from  1878  to  1887,  the  average  price  of  the  best  rolled 
bar-iron  in  Philadelphia  was  $50.30  per  ton  of  2,240  pounds. 
The  average  price  in  England  of  the  best  Staffordshire 


320  RECENT  ECONOMIC  CHANGES. 

marked  bars  was  $35.48 — a  difference  of  $14  per  ton.  And 
here  it  may  be  noted  that  the  disparity  in  the  prices  of  iron 
in  the  United  States  and  Great  Britain  becomes  greater,  the 
higher  we  rise  in  the  qualities  considered.  But  taking  the 
minimum,  or  only  the  average  difference  between  the  price 
of  anthracite  foundry  and  Scotch  pig,  namely,  seven  dol- 
lars, and  applying  it  to  the  aggregate  consumption  of  the 
United  States  from  1878  to  1887—60,000,000  tons— it  fol- 
lows that  the  American  consumers  of  iron  in  these  ten  years 
paid  $420,000,000  in  excess  of  the  cost  of  like  quantity  to 
the  consumers  of  Great  Britain. 

Again,  the  aggregate  consumption  of  steel  in  the  United 
States — domestic  and  foreign — during  the  ten  years  from 
1878  to  1887,  was  over  20,000,000  tons  ;  or  at  an  average  of 
2,000,000  tons  per  annum.  Taking  here,  again,  the  lowest 
form  of  steel — namely,  steel  rails — for  the  purpose  of  ex- 
hibiting the  difference  in  the  average  price  or  cost  of  the 
American  and  the  British  product  of  steel,  it  will  be  found 
that  the  average  price  of  steel  rails  in  the  United  States, 
during  the  period  named,  was  forty-four  dollars  per  ton, 
and  in  Great  Britain  thirty  dollars.  With  this  difference 
in  price,  the  increased  cost  of  the  ten  years'  consumption  of 
steel  by  American  consumers  was  $280,000,000.  But,  as  a 
difference  of  seven  dollars  per  ton  in  the  comparative  price 
of  the  iron  used  for  making  steel  has  been  already  allowed 
in  these  computations,  the  consumption  of  steel  in  the 
United  States  can  only  be  properly  charged  with  half  the 
disparity  in  the  price  of  rails  above  noted,  or  $140,000,000. 

Taking,  therefore,  the  lowest  grades  of  iron  and  steel  as 
the  basis  for  estimating  the  disparity  in  the  cost  of  these 
products  in  the  United  States  and  Great  Britain  respect- 
ively, the  conclusion  is  warranted  that  the  excess  of  cost  of 
iron  and  steel  to  the  consumers  in  the  United  States,  in  the 
ten  years  from  1878  to  1887,  was  $560,000,000,  or  at  an 
average  of  $56,000,000  per  annum. 

On  a  separate  computation,  made  in  the  same  way  for 


A  BURDEN  OF   INDIRECT  TAXATION.  321 

the  year  1887,  the  data  being  derived  from  the  source  be- 
fore mentioned,  the  disparity  of  the  cost  or  price  of  the  iron 
and  steel  consumption  in  the  United  States  for  that  year,  in 
comparison  with  the  prices  paid  in  Great  Britain,  rises  to 
$80,000,000. 

The  total  aggregate  revenue  derived  by  the  Federal  Gov- 
ernment during  the  fiscal  year  ending  June  30,  1887,  from 
the  duties  levied  on  the  importation  of  iron-ores,  pig-iron, 
and  all  manufactures  of  iron  and  steel,  was  $20,713,000.  In 
collecting  this  amount  of  revenue,  which  constituted  less 
than  one  fifth  per  cent  of  the  excess  or  surplus  revenue  of 
that  year,  the  United  States  was,  therefore,  subjected  to  an 
additional  tax  of  $60,000,000,  which  was  ultimately  paid  by 
the  consumers  of  iron  and  steel.  Doubtless  the  difference 
was  largely  absorbed  in  the  cost  of  assembling  the  material, 
and  by  charges  contingent  on  the  making  of  iron  and  steel 
in  furnaces  and  rolling-mills  which  are  either  out  of  date 
or  out  of  place,  and  was  therefore  not  in  the  nature  of  a 
bounty. 

Finally,  the  entire  capital  invested  in  the  iron  industry 
of  the  United  States  in  1880 — including  iron  and  coal  mines 
and  the  manufacture  of  coke — according  to  the  census  data 
of  that  year,  could  not  have  been  in  excess  of  $341,000,000. 
The  price  paid,  therefore,  by  the  consumers  of  iron  and  steel 
in  the  United  States,  in  order  to  sustain  the  iron-furnaces 
and  rolling-mills  of  the  country  for  ten  years  (which  indus- 
tries, as  before  observed,  can  not  be  displaced  or  destroyed 
by  any  possible  foreign  competition),  paying  wages  some- 
what less  on  the  average  than  those  paid  to  outside  labor, 
has  been  about  sixty-five  per  cent  in  excess  of  the  entire 
capital  invested.  The  magnitude  of  the  economic  disturb- 
ances, in  the  way  of  arresting  local  development  and  chang- 
ing the  course  of  the  world's  exchanges,  occasioned  by  the 
continuous  imposition  of  such  a  burden  of  taxation  on  an 
industry  which  may  be  regarded  as  the  foundation  of  all 
industries,  has  passed  into  history.  What  economic  dis- 


322  RECENT  ECONOMIC  CHANGES. 

turbances  will  be  contingent  on  the  discontinuance  of  such 
taxation,  pertain  to  the  future.* 

THE  ECONOMIC  DISTURBANCES  SINCE  1873  CONTIN- 
GENT ON  WAR  EXPENDITURES  are  not  different  in  kind 
from  those  of  former  periods,  but  much  greater  in  degree. 
This  subject  has  been  so  thoroughly  investigated  and  is  so 
well  understood,  that  nothing  more  need  be  said  in  this 
connection  than  to  point  out  that  the  men  in  actual  service 
at  the  present  time  in  the  armies  and  navies  of  Europe  are  in 
excess  of  4,000,000,  or  about  one  to  every  fifteen  of  all  the 
men  of  arms-bearing  age — all  consumers  and  no  producers. 
The  number  of  men  in  reserve,  who  are  armed,  subject  to 
drill,  and  held  ready  for  service  at  any  moment,  is  about 
14,250,000  in  addition.  Including  the  reserves,  the  present 
standing  armies  and  navies  of  Europe  require  the  services 
of  one  in  every  five  of  the  men  of  arms-bearing  age,  or  one 
in  every  twenty-four  of  the  whole  population.  It  is  also 
estimated  that  it  requires  the  constant  product  of  one  peas- 
ant engaged  in  agriculture,  or  of  one  operative  engaged  in 
manufacturing  in  the  commercial  and  manufacturing  states 
of  Europe,  to  equip  and  sustain  one  soldier  ;  that  it  requires 
the  labor  of  one  man  to  be  diverted  from  every  two  hundred 
acres  ;  and  that  a  sum  equivalent  to  $1.10  shall  be  deducted 
from  the  annual  product  of  every  acre.  The  present  aggre- 
gate annual  expenditure  of  Europe  for  military  and  naval 
purposes  is  probably  in  excess  of  a  thousand  million  dollars. 
We  express  this  expenditure  in  terms  of  money,  but  it  means 
work  performed  :  not  that  abundance  of  useful  and  desira- 
ble things  may  be  increased,  but  decreased ;  not  that  toil 
may  be  lightened,  but  augmented. 

As  to  the  ultimate  outcome  of  this  state  of  affairs — os- 
tensibly kept  up  for  the  propagation  or  promotion  of  civili- 

*  For  a  more  detailed  exhibit  of  the  relative  production  and  prices  of  iron 
and  steel  in  the  United  States  and  Great  Britain,  and  of  the  extent  to  which 
the  duties  on  imports  augment  the  price  of  these  metals  in  the  former  coun- 
try, reference  is  made  to  the  Appendix. 


WAR  EXPENDITURES.  303 

zation — there  is  an  almost  perfect  agreement  of  opinion 
among  those  who  have  studied  it ;  and  that  is,  that  the  exist- 
ence and  continuance  of  the  present  military  system  of  Con- 
tinental Europe  is  impoverishing  its  people,  impairing  their 
industrial  strength,  effectually  hindering  progress,  driving 
the  most  promising  men  out  of  the  several  states  to  seek 
peaceful  homes  in  foreign  countries,  and  ultimately  threat- 
ening the  destruction  of  the  whole  fabric  of  society. 

The  contrast  between  ancient  and  modern  war,  limiting 
the  comparison  of  results  to  human  suffering,  is  very  great ; 
but  in  respect  to  the  destruction  of  values  it  is  not  great. 
Carthage  is  not  now  destroyed  ;  but  taxation,  debt,  interest, 
national  reputation,  and  private  losses  represent  a  vast  and 
perhaps  greater  amount  of  devastation.  Recent  authori- 
ties estimate  the  debt  of  Europe  in  1865-'66  to  have  been 
£2,640,000,000 ;  and  that  it  had  been  increased  in  1887— 
mainly  by  reason  of  war  expenditures — to  £4,684,000,000 
($22,264,000,000),  entailing  an  annual  burden  of  interest  of 
£213,640,000  ($1,038,000,000).*  It  is  a  somewhat  popular 
idea  that,  as  the  perfection  of  machinery  for  taking  away 
human  life  makes  war,  or  the  preparation  for  war,  every 
year  more  costly,  the  burden  on  the  different  nations  will 
eventually  become  too  heavy  to  be  borne,  and  thus  compel 
a  general  disarmament.  Experience,  unfortunately,  does 
not  favor  any  such  conclusion.  Nations  seem  always  to  be 
able  to  raise  money  for  war,  when  they  can  not  for  other 
purposes ;  and  the  classes  upon  whom  the  burdens  of  war 
rest  are  not  the  ones  who  initiate  it.  The  result  of  increas- 
ing war  burdens  may  not,  therefore,  presage  disarmament 
and  peace,  but  an  ultimate  terrible  social  struggle  "  between 
the  classes  and  the  masses." 

*  "  Les  Debtes  publiquca  Europ6enos,"  M.  Neymarck,  Paris. 


vm. 

The  economic  outlook — Tendency  to  pessimistic  views-— Antagonism  of  senti- 
ment to  correct  reasoning — The  future  of  industry  a  process  of  evolution 
— The  disagreeable  elements  of  the  situation — All  transitions  in  the  life 
of  society  accompanied  by  disturbance — Incorrect  views  of  Tolstoi — 
Benefical  results  of  modern  economic  conditions — Existing  populations 
not  formerly  possible — The  Malthusian  theory — Present  application  to 
India — Illustrations  of  the  effect  of  new  agricultural  methods  on  produc- 
tion— No  future  famines  in  civilized  countries — Creation  of  new  industrial 
pursuits — Doubtful  perpetuation  of  the  Government  of  the  United  States 
under  old  economic  conditions — Increase  in  the  world's  supply  and  con- 
sumption of  food — Increase  in  the  varieties  of  food — Low  cost  of  subsist- 
ence under  attainable  conditions  in  the  United  States — Savings-bank 
statistics — Decrease  of  pauperism — Statistics  of  crime — Increase  in  the 
duration  of  human  life — Extermination  of  certain  diseases — Future  of 
medicine  and  surgery — Unfavorable  results  of  new  conditions  of  civiliza- 
tion— Increase  of  suicides — Divorce  statistics — Change  in  the  condition  of 
the  British  people  since  1840 — Wealth  of  Great  Britain — British  education 
and  taxation — Present  higher  vantage-ground  of  humanity. 

THE  predominant  feeling  induced  by  a  review  and  con- 
sideration of  the  numerous  and  complex  economic  changes 
and  disturbances  that  have  occurred  since  1873  (as  has  been 
detailed  in  the  foregoing  chapters),  is  undoubtedly,  in  the 
case  of  very  many  persons,  discouraging  and  pessimistic. 
The  questions  which  naturally  suggest  themselves,  and  in 
fact  are  being  continually  asked,  are :  Is  mankind  being 
made  happier  or  better  by  this  increased  knowledge  and 
application  of  the  forces  of  nature,  and  a  consequent  in- 
creased power  of  production  and  distribution  ?  Or,  on  the 
contrary,  is  not  the  tendency  of  this  new  condition  of  things, 
as  Dr.  Siemens,  of  Berlin,  has  expressed  it,  "  to  the  destruc- 
tion of  all  of  our  ideals  and  to  coarse  sensualism ;  to  aggra- 
vate injustice  in  the  distribution  of  wealth;  diminish  to 


THE  ECONOMIC  OUTLOOK.  325 

individual  laborers  the  opportunities  for  independent  work, 
and  thereby  bring  them  into  a  more  dependent  position; 
and,  finally,  is  not  the  supremacy  of  birth  and  the  sword 
about  to  be  superseded  by  the  still  more  oppressive  reign  of 
inherited  or  acquired  property  ?  " 

What  many  think,  but  hesitate  to  say,  finds  forcible  ex- 
pression in  the  following  extract  from  a  letter  addressed  to 
the  author  by  a  large-hearted,  sympathetic  man,  who  is  at 
the  same  time  one  of  the  best  known  of  American  journal- 
ists and  leaders  of  public  opinion.  After  referring  to  his 
great  interest  in  the  exhibit  that  has  been  made  of  the  ex- 
traordinary economic  disturbances  since  1873  and  their 
effect  on  persons,  production,  distribution,  and  prices,  he 
says: 

"  But  what  a  deplorable  and  quite  awful  picture  you  suggest  of  the 
future  I  The  wheel  of  progress  is  to  be  run  over  the  whole  human 
race  and  smash  us  all,  or  nearly  all,  to  a  monstrous  flatness !  I  get  up 
from  the  reading  of  what  you  have  written  scared,  and  more  satisfied 
than  ever  before  that  the  true  and  wise  course  of  every  man  is  to  get 
somewhere  a  piece  of  land,  raise  and  make  what  he  can  for  himself, 
and  try  thus  to  get  out  of  the  crushing  process.  It  seems  to  me  that 
what  we  call  civilization  is  to  degrade  and  incapacitate  the  mass  of 
men  and  women ;  and  how  strange  and  incongruous  a  state  it  is !  At 
the  same  time  these  masses  of  men  are  thrown  out  of  their  accustomed 
employments  by  the  introduction  or  perfection  of  machinery — at  that 
very  time  the  number  of  women  and  children  employed  in  factories 
rapidly  increases;  an  unprecedented  cheapness  of  all  necessaries  of 
life  is  coincident  with  an  intensification  of  the  bitter  struggle  for 
bread  and  shelter.  It  is  a  new  form  of  slavery  which,  it  seems  to  me, 
projects  itself  into  view — universal  slavery — not  patriarchal,  but  mer- 
cantile. I  get  yearly  more  tired  of  what  we  call  civilization.  It  seems 
to  me  a  preposterous  fraud.  It  does  not  give  us  leisure ;  it  does  not 
enable  us  to  be  clean  except  at  a  monstrous  cost ;  it  affects  us  with 
horrible  diseases — like  diphtheria  and  typhoid  fever — poisoning  our 
water  and  the  air  we  breathe ;  it  fosters  the  vicious  classes — the  poli- 
ticians and  the  liquor-sellers — so  that  these  grow  continually  more 
formidable ;  and  it  compels  mankind  to  a  strife  for  bread,  which  makes 
us  all  meaner  than  God  intended  us  to  be.  Do  you  really  think  the 
'  game  pays  for  the  candle '  1 " 
ir, 


326  RECENT  ECONOMIC  CHANGES. 

From  another,  occupying  high  position  as  an  economic 
thinker  and  writer,  come  also  these  questions : 

"What  are  the  social  and  political  results  to  follow  the  sweepir<r 
reconstruction  of  our  material  prices  and  our  labor  system  ?  Are  we 
not  unconsciously,  and  from  the  sheer  force  of  these  new  elements, 
drifting  fast  into  a  form  of  actual  socialism — if  not  exactly  such  as  the 
doctrinaire  reformers  preach,  yet  a  form  which  in  respect  to  material 
"  A  i  interests  swallows  up  individualism  in  huge  combinations  ?  Does  not 
the  economizing  of  the  new  methods  of  production  necessitate  this 
tendency  ?  And,  if  so,  to  what  sort  of  social  reconstruction  is  it  likely 
to  lead  ?  Does  it  mean  a  future  of  industrial  kings  and  industrial 
slaves?  How  far  does  the  new  situation  harmonize  with  current 
aspirations  of  labor  1  Are  these  aspirations  a  reflex  effect  of  the  new 
conditions  of  industry!" 

To  form  now  any  rational  opinion  concerning  the  pres- 
ent and  future  influences  of  the  causes  of  the  recent  and 
existing  economic  disturbances,  and  to  be  able  to  return  any 
intelligent  answers  to  the  questions  and  impressions  which 
they  have  prompted  or  created,  there  is  clearly  but  one  prac- 
tical, common-sense  method  to  adopt,  and  that  is  to  review 
and  analyze  the  sociological  sequences  of  these  disturbances 
so  far  as  they  have  been  developed  and  determined.  A 
review  in  which  sympathetic  sentiments  are  allowed  to  pre- 
dominate is  not,  however,  what  is  needed ;  but  rather  one 
which  will  array  and  consider  the  facts  and  the  conclusions 
which  can  fairly  be  deduced  from  them,  apart,  if  possible, 
from  the  slightest  humanitarian  predisposition.  The  sur- 
geon's probe  that  trembles  in  sympathy  with  the  quivering 
flesh  into  which  it  penetrates,  is  not  the  instrumentality 
best  adapted  for  making  a  correct  diagnosis. 

Such  a  review  it  is  now  proposed  to  attempt,  and  in  enter- 
ing upon  it  the  first  point  worthy  of  attention  is,  that  with 
the  exception  of  a  change  unprecedented  in  modern  times 
— in  the  relative  values  of  the  precious  metals — all  that  has 
occurred  differs  from  the  world's  past  experience  simply  in 
degree  and  not  in  kind.  We  have,  therefore,  no  absolutely 
unknown  factors  to  deal  with ;  and  if  the  record  of  the  past 


INDUSTRIAL  AND  SOCIAL  EVOLUTION.  327 

is  not  as  perfect  as  could  be  desired — for  it  is  only  within  a 
comparatively  recent  period  that  those  exact  statistics  which 
constitute  the  foundations  and  absolute  essentials  of  all 
"correct  economic  reasoning  have  been  gathered — it  is,  never- 
theless, sufficiently  so  to  insure  against  the  commission  of 
any  serious  errors  in  forecasting  the  future,  of  what  in 
respect  to  industry  and  society  is  clearly  a  process  of  evolu- 
tion. This  evolution  exists  in  virtue  of  a  law  of  constant 
acceleration  of  knowledge  among  men  of  the  forces  of 
nature,  and  in  acquiring  a  capacity  to  use  them  for  increas- 
ing or  supplementing  human  effort,  for  the  purpose  of  in- 
creasing and  cheapening  the  work  of  production  and  distri- 
bution. There  is,  furthermore,  no  reason  for  doubting  that 
this  evolution  is  to  continue,  although  no  one  at  any  one  time 
can  foretell  what  are  to  be  the  next  phases  of  development, 
or  even  so  much  as  imagine  the  ultimate  goal  to  which  such 
progress  tends.  The  ignorance,  prejudice,  and  selfishness 
of  man  may  operate  in  the  future,  as  in  the  past  and  at 
present,  in  obstructing  this  progress ;  but  to  entirely  arrest 
it,  or  even  effect  a  brief  retrogression,  would  seem  to  be 
utterly  impossible.* 

That  many  of  the  features  of  the  situation  are,  when 
considered  by  themselves,  disagreeable  and  even  appalling, 
can  not  be  denied.  When  one  recalls,  for  example,  through 
what  seemingly  weird  power  of  genius,  machinery  has  been 
summoned  into  existence — machinery  which  does  not  sleep, 
does  not  need  rest,  is  not  the  recipient  of  wages ;  is  most 
profitable  when  most  unremittingly  employed — and  how  no 
one  agency  has  so  stimulated  its  invention  and  use  as  the  op- 
position of  those  whose  toil  it  has  supplemented  or  lightened 
— the  first  remedial  idea  of  every  employer  whose  labor  is 
discontented  being  to  devise  and  use  a  tool  in  place  of  a 

*  Those  persons  whose  business  renders  them  most  conversant  with  pat- 
ents are  the  ones  most  sanguine  that  nothing  is  likely  to  occur  to  interrupt 
or  even  check,  in  the  immediate  nature,  the  progress  of  invention  and  dis- 
covery. 


328  RECENT  ECONOMIC  CHANGES. 

man ;  *  and  how  in  the  place  of  being  a  hond-slave  it  seems 
to  be  passing  beyond  control  and  assuming  the  mastery; 
when  one  recalls  all  these  incidents  of  progress,  the  follow- 
ing story  of  Eastern  magic  might  be  almost  regarded  in  the 
light  of  a  purposely  obscured  old-time  prophecy :  A  certain 
man,  having  great  learning,  obtained  knowledge  of  an  in- 
cantation whereby  he  could  compel  inanimate  objects  to 
work  for  him,  commanded  a  stick  to  bring  him  water.  The 
stick  at  once  obeyed.  But  when  water  sufficient  for  the 
man's  necessities  had  been  brought,  and  there  was  threat- 
ened danger  of  an  oversupply,  he  desired  the  stick  to  stop 
working.  Having,  however,  omitted  to  learn  the  words 
for  revoking  the  incantation,  the  stick  refused  to  obey. 
Thereupon,  the  magician  in  anger  caught  up  an  axe, 
and,  with  a  view  to  diminish  or  destroy  the  power  of  the 
stick  to  perform  work,  chopped  it  into  several  pieces; 
whereupon,  each  piece  immediately  began  to  bring  as  much 
water  as  one  had  formerly  done ;  and  in  the  end  not  only 
the  magician  but  the  whole  world  was  deluged  and  de- 
stroyed. 


*  The  following  is  one  striking  illustration  in  proof  of  this  statement : 
After  the  reaping-machine  had  been  perfected  to  a  high  degree,  and  had  come 
into  general  use  in  the  great  wheat-growing  States  of  the  Northwest,  the 
farmer  found  himself  for  ten  or  fifteen  days  during  the  harvest  period  at  the 
mercy  of  a  set  of  men  who  made  his  necessity  for  binding  the  wheat  con- 
currently with  its  reaping,  their  opportunity.  They  began  their  work  in  the 
southern  section  of  the  wheat-producing  States,  and  moved  northward  with 
the  progress  of  the  harvesting:  demanding  and  obtaining  $2,  $3,  and  even 
$4  and  upward,  per  day,  besides  their  board  and  lodging,  for  binding; 
making  themselves,  moreover,  at  times  very  disagreeable  in  the  farmers' 
families,  and  materially  reducing  through  their  extravagant  wages  the  profits 
of  the  crop.  An  urgent  demand  was  thus  created  for  a  machine  that  would 
bind  as  well  as  reap ;  and  after  a  time  it  came,  and  now  wheat  is  bound  as  it 
is  harvested,  without  the  intervention  of  any  manual  labor.  When  the  sheaf's 
were  first  mechanically  bound,  iron  wire  was  used  as  the  binding  material ; 
but  when  a  monopoly  manufacturer,  protected  by  patents  and  tariffs,  charged 
what  was  regarded  an  undue  price  for  wire,  cheap  and  coarse  twine  was  sub- 
stituted ;  and  latterly  a  machine  has  been  invented  and  introduced,  which 
binds  with  a  wisp  of  the  same  straw  that  is  being  harvested. 


IS  CIVILIZATION  A  FAILURE!  329 

The  proposition  that  all  transitions  in  the  life  of  society, 
even  those  to  a  better  stage,  are  inevitably  accompanied  by 
human  suffering,  is  undoubtedly  correct.  It  is  impossible, 
as  an  old-time  writer  (Sir  James  Stewart,  1767)  has  re- 
marked, to  even  sweep  a  room  without  raising  a  dust  and 
occasioning  temporary  discomfort.  But  those  who  are  in- 
clined to  take  discouraging  and  pessimistic  views  of  recent 
economic  movements,  seem  not  only  to  forget  this,  but  also 
to  content  themselves  with  looking  mainly  at  the  bad  results 
of  such  movements,  in  place  of  the  good  and  bad  together. 
So  it  is  not  difficult  to  understand  how  a  person  like  the 
Eussian  novelist  Tolstoi,  a  man  of  genius,  but  whose  life 
and  writings  show  him  to  be  eccentric  almost  to  the  verge 
of  insanity,  should,  after  familiarizing  himself  with  peasant- 
life  in  Kussia,  come  to  the  conclusion  that  "  the  edifice  of 
civil  society,  erected  by  the  toil  and  energy  of  countless 
generations,  is  a  crumbling  ruin."  But  the  trials  and  vicis- 
situdes of  life  as  Tolstoi  finds  them  among  the  masses  of 
Kussia  are  the  result  of  an  original  barbarism  and  savagery 
from  which  the  composite  races  of  that  country  have  not 
yet  been  able  to  emancipate  themselves ;  coupled  with  the 
existence  of  a  typically  despotic  government,  which  throt- 
tles every  movement  for  increased  freedom  in  respect  to 
both  person  and  thought.  But  these  are  results  for  which 
the  higher  civilization  of  other  countries  is  in  no  way  re- 
sponsible and  can  not  at  present  help,  but  the  indirect  influ- 
ence of  which  will,  without  doubt,  in  time  powerfully  affect 
and  even  entirely  change.  No  one,  furthermore,  can  fa- 
miliarize himself  with  life  as  it  exists  in  the  slums  and  tene- 
ment-houses of  all  great  cities  in  countries  of  the  highest 
civilization ;  or  in  sterile  Newfoundland,  where  all  Nature  is 
harsh  and  niggardly ;  or  in  sunny  Mexico  and  the  islands  of 
the  West  Indies,  where  she  is  all  bountiful  and  attractive, 
without  finding  much  to  sicken  him  with  the  aspects  under 
which  average  humanity  presents  itself.  But  even  here  the 
evidence  is  absolutely  conclusive  that  matters  are  not  worse, 


330  RECENT  ECONOMIC  CHANGES. 

but  almost  immeasurably  better,  than  formerly ;  and  that 
the  possibilities  for  melioration,  through  what  may  be  termed 
the  general  drift  of  affairs,  is,  beyond  all  comparison,  greater 
than  at  any  former  period. 

The  first  and  signal  result  of  the  recent  remarkable 
changes  in  the  conditions  of  production  and  distribution, 
which  in  turn  have  been  so  conducive  of  industrial  and  so- 
cietary  disturbances,  has  been  to  greatly  increase  the  abun- 
dance and  reduce  the  price  of  most  useful  and  desirable 
commodities.  If  some  may  say,  "  What  of  that,  so  long 
as  distribution  is  impeded  and  has  not  been  correspond- 
ingly perfected?"  it  may  be  answered,  that  production 
and  distribution  in  virtue  of  a  natural  law  are  correlative 
or  reciprocal.  We  produce  to  consume,  and  we  consume 
to  produce,  and  the  one  will  not  go  on  independently 
of  the  other;  and  although  there  may  be,  and  actually 
is,  and  mainly  through  the  influence  of  bad  laws,  more 
or  less  extensive  maladjustment  of  these  two  great  pro- 
cesses, the  tendency  is,  and  by  methods  to  be  hereafter 
pointed  out,  for  the  two  to  come  into  closer  and  closer 
harmony. 

Next  in  order,  it  is  important  to  recognize  and  keep 
clearly  in  view  in  reasoning  upon  this  subject,  what  of  good 
these  same  agencies,  whose  influence  in  respect  to  the  future 
is  now  regarded  by  so  many  with  alarm  or  suspicion,  have 
already  accomplished. 

A  hundred  years  ago  the  maintenance  of  the  existing 
population  of  Great  Britain,  of  the  United  States,  and  of  all 
other  highly-civilized  countries,  could  not  have  been  possi- 
ble under  the  then  imperfect  and  limited  conditions  of  pro- 
duction and  distribution.  Malthus,  who  in  1798  was  led  by 
his  investigations  to  the  conclusion  that  the  population  of 
the  world,  and  particularly  of  England,  was  rapidly  pressing 
upon  the  limits  of  subsistence,  and  could  not  go  on  increas- 
ing because  there  would  not  be  food  for  its  support,  was  en- 
tirely right  from  his  standpoint  on  the  then  existing  economic 


THE  MALTHUSIAN  THEORY.  331 

conditions ;  *  and  no  society  at  the  present  time,  no  matter 
how  favorable  may  be  its  environments  in  respect  to  fertility 
of  land,  geniality  of  climate,  and  sparseness  of  population, 
is  making  any  progress  except  through  methods  that  in 
Malthus's  day  were  practically  unknown.  The  Malthusian 
theory  is,  moreover,  completely  exemplifying  itself  to-day  in 
India,  which  is  densely  populated,  destitute  in  great  degree 
of  roads,  and  of  the  knowledge  and  use  of  machinery.  For 
here  the  conditions  of  peace  established  under  British  rule 
are  proving  so  effective  in  removing  the  many  obstacles  to 
the  growth  of  population  that  formerly  existed,  that  its  in- 
crease from  year  to  year  is  pressing  so  rapidly  on  the  means 
of  subsistence,  that  periodical  famines,  over  large  areas,  and 
accompanied  with  great  destruction  of  life,  are  regarded  as 
so  inevitable  that  the  creation  of  a  national  famine  fund  by 
the  Government  has  been  deemed  necessary,  f 

*  "  Malthus  made  no  prediction  in  the  strict  sense  of  the  word.  He  had 
drawn  out  from  experience  that  the  human  race  tended  to  increase  faster  than 
the  means  of  subsistence ;  its  natural  increase  being  in  geometrical  ratio,  and 
the  increase  of  its  means  of  subsistence  an  arithmetical  one  ;  so  that  population 
had  been  kept  down  only  in  past  times  by  war  and  famine,  and  by  disease  as 
the  consequence  of  famine.  He  was  bound  to  anticipate  that  a  continuance  of 
the  process  would  expose  the  race  once  more  to  the  operation  of  these  natural 
checks,  or  to  a  descent  of  the  masses  in  the  scale  of  living,  or  to  both  of  these 
evils.  That  the  new  experience  has  been  different  from  the  former  one,  and 
that  owing  to  various  causes  the  means  of  subsistence  have  increased  faster 
than  the  population,  even  when  increasing  at  a  Malthusian  rate,  is  no  disproof 
surely  of  the  teaching  of  Malthus.  His  statistical  inquiries  into  the  past  re- 
main as  valuable  as  ever." — "  Some  General  Uses  of  Statistical  Knowledge," 
KOBERT  GIFFEBT,  Royal  Statistical  Society  of  England,  1885. 

t  The  present  condition  of  India  constitutes  one  of  the  most  curious  and 
interesting  economic  and  social  problems  of  the  last  quarter  of  the  nineteenth 
century.  While  the  general  average  of  the  population  for  the  whole  country 
is  184  to  the  square  mile,  there  are  districts  in  India  in  which  a  population,  to 
be  counted  by  tens  of  millions,  averages  from  800  to  400  to  the  square  mile, 
and  others  in  which  a  population,  to  be  counted  by  some  millions,  rises  to 
800  and  even  900  to  the  square  mile.  These  latter  probably  constitute  the 
most  densely -populated  districts  of  the  world,  the  population  of  the  most 
densely-peopled  country  of  Europe — namely,  Belgium  —  averaging  480  to 
the  square  mile.  The  total  population  of  India  is  estimated  at  268,174,000. 
Under  the  old-time  system  of  native  rulers,  frequent  wars,  consequent  on  for- 


332  RECENT  ECONOMIC  CHANGES. 

Under  different  circumstances  the  correctness  of  the 
ideas  of  Malthus  are  also  being  demonstrated  in  Japan. 
Recent  investigations  by  Prof.  Rein,  of  the  University  of 
Bonn,  Germany,  show  "  that  with  an  area  about  the  same 
as  the  State  of  California  (157,000  square  miles),  and  with 
only  one  tenth  of  such  area  practically  available  for  cultiva- 
tion, Japan  supports  a  population  of  36,000,000  almost  en- 
tirely from  her  own  product.  Making  due  allowance  for 
what  may  be  eked  out  of  the  nine  tenths  taken  up  by  for- 
est, desert,  and  mountain,  it  appears  that  the  incredible 
number  of  2,560  inhabitants  are  supported  from  each  square 
mile  of  cultivated  land,  or  four  to  the  acre.  It  is  well  known 

eign  invasions  and  internal  race  antagonisms,  with  accompanying  famines  and 
epidemic  diseases,  materially  restricted  the  growth  of  population.  But  under 
the  conditions  of  peace,  with  protection  for  lite  and  property,  which  have  been 
attendant  in  late  years  on  British  rule,  the  population  of  India  is  increasing  so 
rapidly — nearly  one  per  cent  per  annum — and  so  disproportionately  to  the 
amount  of  new  and  fertile  soil  that  can  be  appropriated,  as  to  leave  but  little 
margin,  under  existing  methods  of  cultis-ation,  for  increasing  the  means  of 
subsistence  for  the  people.  Much  new  soil  has  been  put  under  cultivation 
during  the  last  century  of  British  rule,  and  a  quarter  of  a  million  of  square 
miles  of  cultivable  waste  yet  remains  to  be  occupied ;  but  the  fact  that  the 
national  revenues  from  the  taxation  of  land  have  not  increased  to  any  extent 
in  recent  years  is  regarded  as  proof  that  land  cultivation  is  not  increasing  in 
proportion  to  the  growth  of  population,  and  that  the  limits  of  agricultural  pro- 
duction are  approaching  exhaustion.  An  annual  increase  of  one  per  cent  on 
the  present  population  of  India  means  at  least  20,000,000  more  people  to  feed 
in  ten  years,  and  upward  of  40,000,000  in  twenty  years ;  and  the  problem  to 
which  the  British  Government  in  India  has  now  before  it,  and  to  which  it  is 
devoting  itself  with  great  energy  and  intelligence,  is,  in  what  way,  and  by 
what  means,  can  the  character  and  habits  of  the  people — especially  in  respect 
to  their  methods  of  agriculture — be  so  developed  and  changed  that  "their  in- 
dustry can  become  more  efficient  on  practically  the  same  soil?"  Much  has 
been  already  done  in  the  way  of  increasing  and  cheapening,  through  roads, 
canals,  and  railroads,  the  means  of  transportation,  and  in  promoting  irriga- 
tion and  education,  and  especially  the  use  of  new  tools  and  methods  for  culti- 
vating the  soil.  But  so  many  are  the  obstacles,  and  so  great  is  the  moral  iner- 
tia of  the  people,  that,  although  remarkable  progress  has  been  made,  the 
prospect  seems  to  be  that,  "  from  decade  to  decade,  larger  and  larger  masses 
of  the  semi-pauperized,  or  wholly  pauperized,  will  grow  up  in  India,  requiring 
state  intervention  to  feed  them,  and  threatening  social  and  financial  difficulties, 
of  the  most  dangerous  character." 


MALTHUSIAN  PRACTICE  OF  FRANCE.  333 

that  this  can  be  done  on  a  small  scale,  but  its  application 
to  a  nation  is  marvelous."  Nothing  is  wasted  in  Japan; 
everything  is  utilized,  and  all  arable  land  has  been  brought 
to  the  highest  state  of  cultivation.  But  as  the  existing  pop- 
ulation is  disproportionate  to  the  maximum  product  that 
can  be  obtained  from  the  land  under  the  most  favorable  cir- 
cumstances, there  is  already  no  margin  left  above  the  cost 
of  a  very  frugal  living ;  and  no  further  large  increment  of 
population  under  present  agricultural  conditions  is  consid- 
ered possible. 

France,  also,  at  the  present  time,  according  to  Yves 
Guyot — one  of  the  leading  French  economists  and  states- 
men— "  is  Malthusian  in  practice  though  not  in  doctrine," 
and  he  thus  illustrates  it : 

"  The  virtue  of  frugality  has  been  preached  to  the  Frenchman,  and 
the  bourgeois  has  put  this  virtue  in  practice.  He  has  labored,  only  to 
be  able  the  sooner  to  rest.  The  man  who  is  honored  has  long  been  the 
man  who  '  does  nothing.'  In  order  to  attain  this  dignity,  the  bour- 
geois lived  scantily,  and  sought  in  economy  a  security  for  the  future. 
Stinginess  was  the  bourgeois's  virtue.  Logically  enough  he  stinted 
himself  or  children  as  in  everything  else.  Little  by  little  the  peasant 
proprietors  and  large  farmers  perceived  and  adopted  the  bourgeois 
system.  They  began  with  scraping  together  a  few  crowns  to  buy  a 
morsel  of  land.  Then,  foreseeing  the  partition  of  this  land,  and  dread- 
ing its  attendant  expenses,  which  would  have  swallowed  up  at  a  single 
gulp  all  the  fruits  of  their  toil,  they  effected  a  further  saving — in  chil- 
dren— and  contemptuously  left  it  to  the  poorest  classes  to  burden 
themselves  with  large  families.  We  give  the  proof  of  this  assertion ! 
The  increase  of  population  is  slower  in  France  than  anywhere  else. 
The  birth-rate  of  France  is  eighty  per  cent  lower  than  in  England  and 
Prussia.  For  every  one  hundred  persons  in  England  and  France  re- 
spectively in  1801,  there  were  in  1878  two  hundred  and  twelve  in  Eng- 
land, and  in  France  only  one  hundred  and  forty-two  ! " — "  Principles 
of  Social  Economy,"  by  YVES  GUYOT  (English  translation  by  C.  H. 
Leppington,  London,  188J£). 

Illustrations  confirmatory  of  the  assertion  that  the  food 
resources  of  half  a  century  ago  would  be  inadequate  for  the 
support  of  the  existing  population  of  the  leading  civilized 


334:  RECENT  ECONOMIC  CHANGES. 

countries  are  familiar,  but  the  following  are  so  striking  as 
to  warrant  renewed  presentation  : 

All  the  resources  of  the  population  of  the  United  States, 
as  they  existed  in  1880,  would  have  been  wholly  inadequate 
to  sow  or  harvest  the  present  average  annual  corn  or  wheat 
crops  of  the  country ;  and,  even  if  these  two  results  had 
been  accomplished,  the  greater  proportion  of  such  a  cereal 
product  would  have  been  of  no  value  to  the  cultivator,  and 
must  have  rotted  on  the  ground  for  lack  of  any  means  of 
adequate  distribution;  the  cost  of  the  transportation  of  a 
ton  of  wheat,  worth  twenty-five  dollars  at  a  market,  for  a 
distance  of  a  hundred  and  twenty  miles  over  good  roads, 
and  with  good  teams  and  vehicles,  entirely  exhausting  its 
initial  value. 

Forty  years  ago  corn  (maize)  was  shelled  in  the  United 
States  by  scraping  the  ears  against  the  sharp  edge  of  a 
frying-pan  or  shovel,  or  by  using  the  cob  of  one  ear  to 
shell  the  corn  from  another.  In  this  way  about  five  bush- 
els in  ten  hours  could  be  shelled,  and  the  laborer  would 
have  received  about  one  fifth  of  the  product.  The  six  great 
corn  States  are  Illinois,  Indiana,  Missouri,  Iowa,  Ohio,  and 
Kansas.  They  produce  more  than  one  half  the  corn  raised 
in  the  country.  These  States,  by  the  census  of  1880,  had 
2,056,770  persons  engaged  in  agriculture,  and  it  would  have 
been  necessary  for  this  entire  community  to  sit  astride  of 
shovels  and  frying-pans  for  one  hundred  and  ten  days  out 
of  three  hundred  and  sixty-five  to  shell  their  corn-crop  for 
the  year  1880  by  the  old  processes. 

In  1790,  before  the  grain-"  cradle  "  was  invented,  an 
able-bodied  farm -laborer  in  Great  Britain  could  with  a 
sickle  reap  only  about  a  quarter  of  an  acre  of  wheat  in  a 
day ;  at  the  present  time  a  man  with  two  horses  can  cut, 
rake,  and  bind  in  a  day  the  wheat-product  of  twenty  acres. 

Forty  years  ago  a  deficient  harvest  in  any  one  of  the 
countries  of  Europe  entailed  a  vast  amount  of  suffering  and 
starvation  on  their  population.  To-day  the  deficiency  of 


CONDITIONS  OF  FAMINE.  335 

any  local  crop  of  wheat  is  comparatively  of  little  conse- 
quence, for  the  prices  of  cereals  in  every  country  readily 
accessible  by  railroad  and  steamships  are  now  regulated,  not 
by  any  local  conditions,  but  by  the  combined  production 
and  consumption  of  the  world ;  and  the  day  of  famines  for 
the  people  of  all  such  countries  has  passed  forever.*  The 
extent  to  which  all  local  advantages  in  respect  to  the  supply 
and  prices  of  food  have  been  equalized  in  recent  years  through 
the  railway  service  of  the  United  States,  is  demonstrated  by 
the  fact  that  a  full  year's  requirement  of  meat  and  bread  for 
an  adult  person  can  now  be  moved  from  the  points  of  their 
most  abundant  and  cheapest  production,  a  thousand  miles, 
for  a  cost  not  in  excess  of  the  single  day's  wages  of  an  aver- 
age American  mechanic  or  artisan. 

The  same  conditions  that  one  hundred,  or  even  fifty, 

*  It  is  not  a  little  difficult  to  realize  that  the  causes  which  were  operative 
to  occasion  famines  a  hundred  years  ago  in  Western  Europe,  and  which  have 
now  apparently  passed  away  forever,  are  still  operative  over  large  portions  of 
the  Eastern  world.  The  details  of  the  last  great  famine  in  China,  which 
occurred  a  few  years  ago,  indicate  that  over  five  million  people  died  of  starva- 
tion in  the  famine  district,  while  in  other  portions  of  the  empire  the  crops 
were  more  abundant  than  usual.  The  trouble  was,  that  there  were  no  means 
of  transporting  the  food  to  where  it  was  needed.  The  distance  of  the  famine 
area  to  the  port  of  Tientsin,  a  point  to  which  food  could  be  and  was  readily 
transported  by  water,  was  not  over  two  hundred  miles ;  and  yet  when  the 
foreign  residents  of  Shanghai  sent  through  the  missionaries  an  important 
contribution  of  relief,  it  required  fifteen  days,  with  the  employment  of  all  the 
men,  beasts,  and  vehicles  that  could  be  procured,  to  effect  the  transportation 
of  the  contribution  in  question  over  this  comparatively  short  distance.  Relief 
to  any  appreciable  extent  to  the  starving  people  from  the  outside  and  pros- 
perous districts  was,  therefore,  impracticable.  Consul  H.  M.  Jewett,  in 
writing  to  the  United  States  Department  of  State,  in  Juno,  1887,  on  the  great 
distress  by  reason  of  deficiency  of  food  and  threatened  famine  at  that  time  in 
Asia  Minor  states,  that  while  certain  districts  were  greatly  suffering  for  want 
of  grain,  an  oversupply  in  other  districts  was  wholly  unavailable  for  lack  of 
facilities  for  railroad  transportation  ;  a  condition  of  affairs  identical  with  what 
prevailed  in  France  during  the  last  half  of  the  eighteenth  century.  Contrast 
these  experiences  with  the  fact  that  when  Chicago  burned  up  in  1871  a  train 
loaded  with  relief  contributions  from  the  city  of  New  York,  over  the  Erie 
Railroad,  traversed  nearly  a  thousand  miles  and  reached  its  destination  in 
twenty-one  hours  after  the  time  of  departure. 


336  RECENT  ECONOMIC  CHANGES. 

years  ago  limited  the  supply  of  food,  and  made  it  confess- 
edly inadequate  to  meet  the  demands  of  a  population  in- 
creasing in  a  greatly  disproportionate  ratio,  also  limited  the 
opportunities  for  employment  to  such  increasing  numbers 
apart  from  agriculture.  Nearly  and  probably  fully  one  half 
of  all  those  who  now  earn  their  living  in  industrial  pursuits, 
do  so  in  occupations  that  not  only  had  no  existence,  but 
which  had  not  even  been  conceived  of,  a  hundred  years  ago. 
The  business  of  railroad  construction,  equipment,  and  oper- 
ation, which  now  furnishes  employment,  directly  or  indi- 
rectly, to  about  one  tenth  of  all  the  population  of  the  United 
States  engaged  in  gainful  occupations,  was  wholly  unknown 
in  1830.  Apart  from  domestic  or  farm  service  little  oppor- 
tunity existed  for  women  to  earn  a  livelihood  by  labor  at 
the  commencement  of  the  present  century ;  but  at  the  pres- 
ent time  more  than  three  million  women  in  the  United 
States  are  engaged  in  nearly  every  kind  of  labor  pursued  by 
men,  from  tilling  the  prairies  of  the  West  to  preaching — a 
vast  multitude  that  every  year  grows  greater. 

The  existence  of  the  present  populations  of  Europe  and 
the  United  States — nay,  more,  the  continuance  and  progress 
of  civilization  itself  —  has  therefore  been  made  possible 
solely  through  the  invention  and  use  of  the  same  labor-sav- 
ing machinery  which  not  a  few  are  inclined  to  regard  as 
likely  to  work  permanent  injury  to  the  masses  in  the  future. 
It  is  still  easy  to  avoid  all  trouble  arising  out  of  the  use  of 
labor-saving  machinery  by  going  to  the  numerous  countries 
— many  of  which  are  rich  in  the  bounties  of  Nature — which 
do  not  possess  it.  But  these  are  the  very  countries  to  which 
no  person  of  average  intelligence  desires  to  go. 

Kestless  and  progressive  humanity  generally  believes  also 
that  the  continued  betterment  of  the  race  is  largely  condi- 
tioned on  the  extension  of  free  government  based  on  popu- 
lar representation  and  constitutional  safeguards;  and  also 
on  the  successful  continuation  of  the  experiment  under  such 
conditions  which  was  entered  upon  by  the  people  of  the 


CONDITIONED  EXISTENCE  OP  THE  UNITED  STATES.    337 

United  States  just  a  hundred  years  ago.  But  the  Govern- 
ment of  the  United  States,  under  its  existing  Constitution, 
has  been  made  possible  only  through  the  progress  which 
man  has  made  in  recent  years  in  his  knowledge  and  control 
of  the  forces  of  nature.  Without  the  perfected  railroad 
and  telegraph  systems,  the  war  for  the  maintenance  of  the 
Federal  Union  under  the  existing  Constitution  could  not 
probably  have  been  prosecuted  to  a  successful  conclusion ; 
and  even  if  no  domestic  strife  had  intervened,  it  is  more  than 
doubtful  whether  a  federation  of  numerous  States,  sovereign 
in  many  particulars — floating  down  the  stream  of  time  like 
an  elongated  series  of  separate  rafts,  linked  together — could 
have  been  indefinitely  perpetuated,  when  the  time  necessary 
to  overcome  the  distance  between  its  extremities  for  the 
mere  transmission  of  intelligence  amounted  to  from  twenty 
to  thirty  days.* 

In  every  highly  civilized  country,  where  accurate  investi- 
gations have  been  instituted,  the  consumption  of  all  the 
substantial  articles  of  food,  as  well  as  of  luxuries,  has,  within 
recent  years,  been  largely  and  progressively  increasing ;  and 
as  the  consumption  of  rich  and  well-to-do  people  in  such 
countries  remains  almost  stationary,  inasmuch  as  they  have 
always  been  able  to  have  all  they  desired  of  such  articles,  it 
is  reasonable  to  infer  that  this  result  has  been  mainly  due  to 
the  annually  increasing  ability  of  the  masses  to  consume. 
In  Great  Britain,  where  this  matter  has  been  more  thor- 
oughly investigated  than  in  any  other  country,  the  facts  re- 
vealed (as  will  be  presently  shown)  are  most  extraordinary. 
In  the  case  of  the  population  of  Paris,  M.  Leroy-Beaulieu 
also  reports  a  wonderful  increase  in  the  consumption  of 
food-products  since  1866,  and  states  that,  if  the  ravages  of 
the  phylloxera  (vine-pest)  could  be  checked,  and  the  price 


*  When  the  battle  of  New  Orleans  was  fought,  in  1815,  more  than  twenty- 
two  days  elapsed  before  the  Government  at  Washington  received  any  informa- 
tion of  its  occurrence. 


338  RECENT  ECONOMIC  CHANGES. 

of  wine  reduced,  the  cost  of  living  for  the  whole  of  France 
would  be  less  than  it  has  ever  been  during  the  last  half- 
century.  In  the  United  States  the  increase  in  the  con- 
sumption of  such  pure  luxuries  as  spirits  and  tobacco  is 
increasing  in  a  greater  ratio  than  population.  In  1888,  the 
consumption  of  distilled  spirits  was  1*23  gallons  per  capita. 
The  consumption  of  beer  has  increased  from  6*68  gallons  per 
capita  in  1878  to  8-26  gallons  in  1880, 10-18  gallons  in  1883, 
and  12'48  in  1888.  The  increase  in  the  consumption  of 
tobacco  in  recent  years  has  also  been  enormous.  In  1868 
the  recorded  consumption  was  about  1'30  pounds  per  capita 
of  manufactured  tobacco  and  16'7  cigars  per  capita  each  year, 
with  no  consumption  of  cigarettes.  In  the  ten  years  ending 
with  1878,  notwithstanding  the  general  depression  in  business 
in  the  later  year,  the  consumption  on  the  whole  more  than 
doubled,  rising  to  2*31  pounds  per  capita  of  manufactured 
tobacco  and  40*5  cigars  per  capita,  besides  3-5  cigarettes  for 
each  inhabitant.  In  the  ten  years  ending  in  1888,  the  con- 
sumption of  manufactured  tobacco  increased  about  fifty  per 
cent,  or  to  3'23  pounds  per  capita ;  of  cigars,  more  than  fifty 
per  cent,  or  61-4  for  each  inhabitant ;  and  of  cigarattes,  from 
3-5  to  29'7  for  each  person.  In  these  figures,  therefore,  is 
to  be  found  a  demonstration  that  the  ability  of  the  masses 
in  the  United  States  in  recent  years  to  satisfy  their  desires 
has  materially  increased,  and  that  the  condition  of  the 
working-people  has  at  all  events  been  far  removed  from  pri- 
vation. 

Great  improvements  have  been  made  during  the  last  ten 
or  twenty  years  in  the  breeding  of  live-stock  and  its  eco- 
nomical management,  whereby  a  greatly  increased  product 
of  animal  food  can  be  obtained  from  a  given  number  with 
comparatively  little  increased  labor  or  expense.  In  the  mat- 
ter of  dairy  produce,  recognized  authorities  in  England  esti- 
mate that  the  average  increase  in  the  yield  of  milk  per  cow 
in  that  country  has  been  at  least  forty  gallons  per  annum 
since  1878 ;  and  this  for  the  3,500,000  cows  in  milk,  owned 


INCREASED  PRODUCTION   OF  FOOD.  339 

by  British  farmers,  "  means  140,000,000  extra  gallons  of  milk 
over  and  above  what  the  same  animals  yielded  in  1878 ;  and 
at  Gd.  per  gallon  would  amount  to  an  extra  return  of  no  less 
than  £3,500,000  for  the  United  Kingdom,  or  £1  per  cow. 
If  made  into  cheese,  it  would  mean  an  increase  of  62,500 
tons."  In  the  case  of  both  cattle  and  sheep,  it  is  entirely 
practicable  to  get  the  same  weight  of  meat  in  an  animal 
at  two  or  three  years  of  age  as  was  formerly  obtained  at 
four  or  five  years ;  and  improvement  in  this  early  matur- 
ity in  turn  means  that  the  quantity  of  meat  made  by 
the  same  number  of  animals  is  very  much  greater  than 
formerly. 

Furthermore,  not  only  has  the  supply  of  food  increased, 
but  the  variety  of  food  available  to  the  masses  has  become 
greater.  Nearly  all  tropical  fruits  that  will  bear  transporta- 
tion have  become  as  cheap  in  non-tropical  countries  as  the 
domestic  fruits  of  the  latter,  and  even  cheaper ;  and  the  in- 
creased consumption  thus  induced  has  built  up  new  and 
extensive  branches  of  business,  and  brought  prosperity  to 
the  people  of  many  localities  that  heretofore  have  had  no 
markets  for  any  products  of  their  industry.* 

The  knowledge  gained  in  recent  years  respecting  the 
wonderful  fecundity  of  fish,  and  the  conditions  for  their 
favorable  breeding  and  preservation,  is  so  complete,  that  the 
claim  has  been  made  that  the  world  might  be  fed  from  the 
ocean  alone,  and  that  an  acre  of  the  sea  properly  cultivated 
is  capable  of  yielding  more  food  than  ten  acres  of  arable 
land.  Thirty  or  forty  years  ago  fish  in  its  most  acceptable 
form — namely,  fresh — was  only  available  to  consumers  living 
in  close  proximity  to  the  ocean ;  but  now,  fish  caught  on  the 
waters  of  the  North  Pacific,  and  transported  more  than 

*  In  the  seven  years  from  1880  to  1887  the  importation  of  bananas  into  the 
United  States  increased  forty-fold.  In  that  name  year  twenty-six  steamers  per 
month,  together  with  a  large  number  of  sailing-vessels,  were  engaged  in  this 
business ;  and  in  the  city  of  New  Orleans  more  than  five  hundred  people 
found  employment  in  the  mere  handling  of  this  single  article  of  fruit 


340  RECENT  ECONOMIC  CHANGES. 

two  thousand  miles,  are  daily  supplied  fresh  to  the  markets 
of  the  Atlantic  slope  of  the  United  States,  and  sea-products 
of  the  coast  of  the  latter,  transported  two  thousand  miles, 
are  regularly  furnished  in  a  fresh  condition  to  British 
markets. 

During  the  whole  period  from  1870  to  1888  the  world's 
consumption  of  luxuries — of  tea,  coffee,  and  fermented 
liquors — has  gone  on  increasing,  and  shows  only  a  certain 
retardation  of  the  rate  of  progress,  and  not  a  positive  decline, 
even  in  the  specially  bad  years. 

One  point  of  immense  and  novel  importance  in  helping 
to  a  conclusion  as  to  whether  the  race  under  the  conditions 
of  high  civilization  is  tending  toward  increased  comfort  and 
prosperity,  or  toward  greater  poverty  and  degradation,  is  to 
be  found  in  the  fact  which  recent  investigators  have  deter- 
mined, namely :  that  in  the  United  States  the  daily  wages 
paid,  or  the  daily  earning  capacity  of  a  healthy  adult  worker, 
in  even  the  most  poorly  remunerated  employments,  is  more 
than  sufficient,  if  properly  expended,  to  far  remove  the 
individual  recipient  from  anything  like  absolute  want,  suffer- 
ing, or  starvation.  Thus,  in  the  case  of  fifty-nine  adult 
female  operatives  in  a  well-managed  cotton-mill  in  Maryland, 
the  per  capita  cost  of  subsistence,  with  a  bill  of  fare  em- 
bracing meats,  all  ordinary  groceries  and  vegetables,  milk, 
eggs,  butter,  fish,  and  fruit,  has  been  found  to  be  not  in 
excess  of  twenty  cents  per  day,  including  the  cost  of  the 
preparation  of  the  food  and  its  serving.  In  Massachusetts, 
where  the  results  were  derived  from  the  six  months'  board- 
ing of  seventeen  men  and  eight  women  (three  servants),  the 
men  being  engaged  in  arduous  mechanical  employments, 
and  consuming  comparatively  large  quantities  of  meat,  the 
daily  cost  of  the  subsistence  of  each  individual  was  twenty- 
eight  cents  per  day.  In  the  jails  of  Massachusetts  the 
average  daily  cost  of  the  food  of  the  prisoners  and  of  the 
employes  of  the  prisons  for  the  year  1883 — bread  of  the  best 
quality,  good  meats,  vegetables,  tea,  rye-coffee,  being  fur- 


POSSIBLE  COST  OF  SUBSISTENCE.  341 

nished  liberally — was  a  trifle  over  fifteen  cents  per  day  for 
each  person.* 

In  the  State  of  Maine  the  average  cost  of  the  food  (raw 
material)  of  the  convicts  in  the  State-prison,  for  the  seven 
years  next  preceding  November,  1887,  was  11-63  cents  per 
day;  the  quality  of  the  food  being  very  good  (including 
meat  or  fish,  milk,  coffee,  and  molasses  every  day),  and  the 
quantity  supplied  to  each  person  being  limited  only  to  his 
or  her  eating  capacity. 

In  one  of  the  best  conducted  almshouses  of  Connecticut, 
the  condition  of  which  was  carefully  investigated  by  the 
writer  in  1887,  the  sum  of  $7,000  per  annum,  exclusive 
of  interest  on  the  plant  and  extraordinary  repairs,  was 
found  to  be  sufficient  to  maintain  an  average  of  sixty-five 
inmates,  mainly  adults,  in  a  building  of  modern  construc- 
tion, scrupulously  clean,  thoroughly  warmed  and  ventilated, 
with  an  abundance  of  good  and  varied  food,  clothing  and 
medical  attendance,  or  at  an  average  daily  expenditure  of 
about  thirty  cents  per  capita.  The  average  weekly  cost  of 
the  patients  in  the  six  establishments  for  the  care  of  the 
insane  in  Massachusetts  for  the  year  1887  was  $3.50  for  each 
patient. 

The  evidence,  therefore,  is  conclusive  that  "an  ample 
and  varied  supply  of  attractive  and  nutritious  food  can  be 
furnished  in  the  Eastern  portions  of  the  United  States — 
and  probably  in  Great  Britain  also — at  a  cost  not  exceeding 
twenty  cents  per  day,  and  for  a  less  sum  in  the  Western  sec- 
tions of  the  country,  provided  that  it  is  judiciously  pur- 
chased and  economically  served  " ;  and  the  legitimate  infer- 
ence from  these  results  is,  that  the  problem  of  greatest 

*  These  results  arc  due  to  the  laborious  and  careful  investigations  of  Mr.  I 
Edward  Atkinson,  of  Massachusetts,  and  were  first  published  in  1884,  under  I 
the  title  of  "  The  Distribution  of  Products."     Together  with  the  results  of 
similar  investigations  conducted  by  Mr.  Robert  Giffen,  of  England,  they  rank 
among  the  most  important  and  valuable  contributions  ever  made  to  economic 
and  social  science. 


312  RECENT  ECONOMIC  CHANGES. 

importance  to  be  solved  in  the  United  States  and  in  Great 
Britain,  in  the  work  of  ameliorating  the  condition  of  the 
honest  and  industrious  poor  is  (as  Mr.  Atkinson  has  ex- 
pressed it),  to  find  out  how  to  furnish  them  with  ample  and 
excellent  food  as  cheaply  as  it  is  supplied  to  the  inmates  of 
our  prisons  and  almshouses. 

The  facts  in  regard  to  the  general  increase  in  the  deposits 
of  savings-banks,  and  the  decrease  in  pauperism,  are  also 
entitled  to  the  highest  consideration  in  this  discussion.  In 
the  United  States  the  aggregate  deposits  in  such  banks  were 
probably  about  $1,500,000,000  in  1888  as  compared  with 
$759,946,000  in  1873-'74 ;  an  increase  of  nearly  one  hundred 
per  cent  in  fourteen  years,  while  the  increase  of  population 
during  the  same  period  was  probably  not  in  excess  of  thirty- 
six  per  cent.*  A  rapid  increase  in  recent  years  in  the 
savings-bank  deposits  of  most  of  the  countries  of  Europe 
is  also  reported.  In  Great  Britain  the  increase  between 
1875  and  1885,  as  regards  deposits,  was  forty  per  cent,  and 
in  the  number  of  depositors  over  fifty  per  cent. ;  while  the 
increase  in  population  during  the  same  period  was  about  ten 
per  cent.  The  capital  of  all  the  "  trustee  "  and  "  postal " 
savings-banks  in  Great  Britain  in  May,  1889,  was  £106,502,- 
200  ($517,659,892).  But,  besides  these  savings-banks,  there 
are  in  Great  Britain  a  number  of  institutions  for  the  pro- 

*  The  development  of  the  savings-bank  system  in  the  United  States  up  to 
the  year  1888  has  been  confined  almost  entirely  to  the  Eastern  and  Middle 
States ;  and  in  that  year  such  banks  were  in  full  operation  in  only  ten  States, 
and  only  partially  so  in  three  other  States.  These  thirteen  States  were  Maine, 
New  Hampshire,  Vermont,  Massachusetts,  Khode  Island,  Connecticut,  New 
York,  New  Jersey,  Pennsylvania,  Maryland,  Ohio,  Wisconsin,  and  Minne- 
sota. The  deposits  in  these  banks,  furthermore,  by  no  means  represent  the 
entire  result  of  the  provident  savings  of  the  people  of  the  United  States. 
Life-insurance  takes  a  not  unimportant  share  of  the  savings  of  the  people, 
building  and  loan  associations  attract  some,  and  cheap  and  easy  investments 
in  real  estate  doubtless  take  their  share  of  savings.  Still,  the  fact  remains 
that,  as  shown  by  the  territorial  distribution  of  the  savings-banks,  a  very 
considerable  field  for  the  extension  of  the  system  in  the  United  States  still 
continues  open. 


SAVINGS-BANK  DEPOSITS.  343 

motion  of  thrift,  which  have  no  exact  counterpart  in  the 
United  States,  and  which  also  hold  large  amounts  of  the 
savings  of  the  people ;  as  railway  savings-banks,  incorporated 
provident  building  societies  (with  £53,000,000  of  funds  in 
1887),  friendly  societies,  etc.,  and  in  all  of  which  the  deposits 
are  rapidly  increasing.  Savings-banks,  it  may  also  be  men- 
tioned, have  been  established  in  connection  with  the  schools 
of  Great  Britain ;  and  the  number  of  schools  having  such 
arrangements  in  1887  was  reported  at  2,225.  The  statistics 
of  the  "  postal  savings-banks  "  of  Great  Britain,  institutions 
not  known  in  the  United  States,  but  which  seem  to  find 
special  favor  with  the  British  people,  are  especially  worthy 
of  notice.  Their  increase  from  1878  to  1887  has  been  from 
5,831  to  8,720  in  number,  from  1,892,756  to  3,951,761  in 
depositors,  and  from  £30,411,563  to  £53,974,000  in  credits  to 
accounts.  "  Despite  all  fluctuations  in  trade,  the  deposits  in 
these  banks  have  gone  on  steadily  increasing  year  by  year ; 
and  that  this  has  been  due  to  greater  thrift  among  the 
working-classes,  and  not  to  the  growth  of  a  larger  class  of 
accounts,  is  proved  by  the  fact  that  the  average  amount  to 
the  credit  of  each  depositor  was  decidedly  less  in  1888  than 
in  1878.  Or,  to  put  it  in  another  way,  the  depositors  have  in- 
creased in  number  nearly  one  hundred  and  nine  per  cent,  while 
the  deposits  have  increased  by  only  seventy-seven  per  cent." 

The  aggregate  capital  of  all  the  savings-banks  and  provi- 
dent institutions  of  Great  Britain  in  1888  was  probably 
about  £215,000,000,  or  considerably  in  excess  of  one  thou- 
sand millions  of  dollars. 

Switzerland  and  Sweden  and  Norway  lead  all  the  nations 
of  Europe  in  the  ratio  of  savings-deposits  to  the  population 
— the  increase,  comparing  1860  with  1881,  having  been  from 
the  ratio  of  4-2  to  35-5  in  the  former,  and  in  the  case  of  the 
latter  from  6-8  to  18'1.  In  Prussia,  where  the  savings- 
banks  are  used  almost  exclusively  by  the  poorer  classes,  the 
deposits  are  regularly  increasing,  and  for  1887-'88  were 
larger  than  in  any  previous  year. 


344  RECENT  ECONOMIC  CHANGES. 

The  percentage  increase  in  deposits  and  depositors  in 
France  and  Italy  in  recent  years  has  also  been  large,  and  far 
in  excess  of  any  percentage  increase  in  their  population. 
The  aggregate  savings-deposits  in  various  institutions  and 
societies  for  the  Continent  of  Europe,  in  1885,  was  estimated 
at  £338,000,000 ;  or,  including  Great  Britain,  £538,000,000 
($2,614,000,000).  It  is  clear,  therefore,  from  these  data, 
that  the  habit  and  the  power  of  saving  have  greatly  increased 
in  recent  years  in  all  highly  civilized  countries  and  are 
still  increasing. 

There  are  no  statistics  of  national  pauperism  in  the 
United  States,  and  general  conclusions  are  based  mainly  on 
the  returns  made  in  the  eight  States  of  New  York,  Penn- 
sylvania, Ohio,  Illinois,  Massachusetts,  Wisconsin,  and 
Michigan.  A  report  made  by  the  standing  committee  of  the 
various  State  boards  of  charities  to  the  National  Conference 
of  Charities  in  1887  was,  that  "  except  for  the  insane,  who 
are  everywhere  constantly  accumulating  beyond  their  due 
ratio  to  the  whole  population,  there  has  never  been  for  a 
period  of  five  years  any  increase  in  the  proportion  of  pau- 
pers to  the  population ;  while  for  longer  periods  there  has 
generally  been  a  decrease  in  the  number  of  the  poor  as  com- 
pared with  the  whole  population  " ;  and  this,  too,  notwith- 
standing the  very  great  obstacles  which  stand  in  the  way  of 
all  public  and  private  effort  for  the  checking  of  pauperism 
in  a  country  like  the  United  States, "  which  annually  receives 
such  armies  of  poor  from  European  countries,  and  at  home 
permits  intemperance  to  breed  so  much  of  pauperism,  espe- 
cially in  cities." 

In  England,  where  the  population,  between  1875  and 
1885,  increased  in  a  larger  proportion  than  in  any  previous 
decade,  there  was  no  increase  but  a  very  steady  decrease  of 
pauperism ;  or,  from  an  annual  average  number  of  952,000, 
or  4-2  per  cent  of  the  whole  population  in  1870-'77  to 
787,000,  or  three  per  cent  of  the  population  for  1880-'84. 
For  the  year  1888  the  number  relieved  in  England  and 


PAUPERISM  AND  CRIME.  345 

Wales  was  2-7  per  cent  of  the  population.  For  Scotland, 
the  corresponding  figures  are  much  the  same;  although 
the  Scotch  administration  of  the  poor  is  totally  inde- 
pendent of  that  of  the  English.  In  short,  there  is  no 
evidence  that  pauperism  is  increasing  in  England  and  Scot- 
land with  their  recent  marked  increase  in  population,  or 
that  the  people  are  less  fully  employed  than  formerly ;  but 
the  evidence  is  all  to  the  contrary.  In  Ireland,  the  experi- 
ence has  been  different.  "  Here,  there  has  been  an  increase 
in  pauperism,  accompanied  by  a  decline  in  population,"  the 
number  of  paupers  in  receipt  of  relief,  on  the  1st  of  January, 
1887,  being  returned  as  113,241,  as  compared  with  106,717 
in  1885.* 

Prussia,  with  a  marked  increase  in  population,  returned 
a  decrease  in  the  number  of  paupers  receiving  relief  from 
cities  and  towns  from  3'87  per  cent  of  the  whole  number  in 
1884,  to  3-65  per  cent  in  1885. 

Crime  in  Great  Britain  is  diminishing  in  a  remarkable 
manner.  A  diminution  is  also  reported  in  Italy.  In  the 
United  States,  while  crime  has  diminished  in  a  few  States, 
for  the  whole  country  it  has,  within  recent  years,  greatly 
increased.  In  1850  the  proportion  of  prison  inmates  was 
reported  as  one  to  every  3,448  of  the  entire  population  of 
the  country ;  but  in  1880  this  proportion  had  risen  to  one 
for  every  855.  These  results  are  believed  to  be  attributable 
in  the  Northern  States  mainly  to  the  great  foreign  immigra- 
tion, and,  in  the  Southern,  to  the  emancipation  of  the 
negroes. 

Finally,  an  absolute  demonstration  that  the  progress  of 
mankind,  in  countries  where  the  new  economic  conditions 
have  been  most  influential  in  producing  those  disturbances 
and  transitions  in  industry  and  society  which  to  many  seem 
fraught  with  disaster,  has  been  for  the  better  and  not  for 


*  "  The  Material  Progress  of  Great  Britain  "  ;  address  before  the  Economic 
Section  of  the  British  Association,  1887,  by  Robert  Giffen. 


346  RECENT  ECONOMIC  CHANGES. 

the  worse,  is  to  be  found  in  the  marked  prolongation  of  hu- 
man life,  or  decline  in  the  average  death-rate,  which  has 
occurred  within  comparatively  recent  years  in  these  same 
countries.  Thus,  the  average  annual  death-rate  in  England 
and  Wales,  during  the  peri6d  from  1838  to  1875,  was  22-3  per 
thousand.  From  1876  to  1880,  it  was  20-08.  But,  for  the 
six  years  from  1880  to  1887,  the  average  has  not  exceeded 
19-3  ;  which  means  that  about  500,000  persons  in  England 
and  Wales  were  alive  at  the  close  of  the  year  1886  who  would 
have  been  dead  if  the  rate  of  mortality  which  prevailed  be- 
tween 1838  and  1875  had  been  maintained.*  The  average 
annual  death-rate  of  the  city  of  London  for  the  decade  be- 
ginning in  1860  was  24-4  per  thousand.  In  the  following 
ten  years  it  declined  to  22*5.  But  for  the  year  1888  it  was 
only  18-5  per  thousand;  a  rate  lower  than  any  previously 
recorded  within  the  metropolitan  area,  and  which  entitles 
London  to  the  claim  of  being  the  healthiest  of  all  the 
world's  great  cities.  In  Vienna,  Austria,  the  death-rate  has 
decreased  since  1870  from  41  to  21  per  thousand ;  a  result 
that  has  been  sequential  to  the  introduction  into  the  city  of 
an  improved  supply  of  good  water,  and  to  the  extensive  con- 
struction of  new  and  improved  houses — fifty-eight  per  cent 
of  all  the  houses  of  Vienna  having  been  built  since  1848. 
The  average  death-rate  for  the  whole  United  States,  for  the 
census  year  1880,  was  between  17  and  18  per  thousand; 
which  is  believed  to  be  a  less  mean  rate  than  that  of  any 
European  country  except  Sweden. 

The  results  of  the  most  recent  and  elaborate  investiga- 
tions on  this  subject,  communicated,  with  data,  by  M.  Va- 
chee,  to  the  "  Bulletin  de  1'Institut  International  Statis- 
tique,"  Eome,  1887,  are,  that  the  mortality  of  Europe  has 
diminished  from  twenty-five  to  thirty-three  per  cent,  and 


*  It  is  also  to  be  noted  that  by  far  the  larger  proportion  of  the  increased 
duration  of  human  life  in  England  is  lived  at  useful  ages,  and  not  at  the  de- 
pendent ages  of  either  childhood  or  old  age. 


DECREASE  OP  MORTALITY  AND  DISEASE.        347 

that  the  mean  duration  of  life  has  increased  from  seven  to 
twelve  years,  since  the  beginning  of  this  century.  This  esti- 
mate of  the  rate  of  improvement  for  all  Europe  is  higher 
than  the  English  data  would  alone  warrant,  but  may  be  cor- 
rect. At  the  same  time  it  is  well  recognized  that  through 
the  absence  of  reliable  data  it  is  impossible  to  speak  with 
certainty  as  to  the  decrease  in  mortality,  or  as  to  the  expec- 
tation of  life  in  any  country,  except  in  respect  to  the  last 
forty  or  fifty  years. 

Now,  while  improved  sanitary  knowledge  and  regulations 
have  contributed  to  these  results,  they  have  been  mainly  due 
to  the  increase  in  the  abundance  and  cheapness  of  food- 
products,  which  in  turn  are  almost  wholly  attributable  to 
recent  improvements  in  the  methods  of  production  and  dis- 
tribution. But,  whatever  may  have  been  the  causes  of  these 
changes,  they  could  not  have  occurred  without  an  increase 
of  vitality  among  the  masses. 

Again,  if  civilization  is  responsible  for  many  new  dis- 
eases, civilization  should  be  credited  with  having  stamped 
out,  or  greatly  mitigated,  not  a  few  that  a  century  ago  were 
extremely  formidable.  Plague  and  leprosy  have  practically 
long  disappeared  from  countries  of  high  civilization.  For 
the  five  years  from  1795  to  1800  the  average  annual  number 
of  deaths  from  small-pox  in  the  city  of  London  was  10,180 ; 
but  for  the  five  years  from  1875  to  1880  it  was  only  1,408. 
Typhus  and  typhoid  fevers  are  now  known  to  be  capable  of 
prevention,  and  cholera  and  yellow  fever  of  complete  terri- 
torial restriction.  Typhus  fever,  once  the  scourge  of  Lon- 
don, and  especially  of  its  prisons,  is  said  to  have  now  entirely 
disappeared  from  that  city.  Anaesthetics  have  removed  the 
pain  attendant  upon  surgical  operations;  and  the  use  of 
antiseptics  has  reduced  the  mortality  contingent  upon  the 
same  in  the  larger  hospitals ;  or,  taking  the  experience  of 
Germany  as  the  basis  of  comparison,  from  41-6  in  1868  to 
4'35  per  cent  in  1880.  According  to  Mr.  Edwin  Chadwick, 
"  in  the  larger  schools  of  the  districts  of  the  poor-law  union 


348  RECENT  ECONOMIC  CHANGES. 

of  Great  Britain  .  .  .  the  chief  diseases  of  children  are  now 
practically  abolished.  These  institutions  may  be  said  to  be 
children's  hospitals,  in  which  children,  orphans  of  the  low- 
est type  from  the  slums,  are  taken  in  large  proportions  with 
developed  diseases  upon  them,  often  only  to  die  from  con- 
stitutional failure  alone.  Yet  in  a  number  of  these  separate 
schools  there  are  now  no  deaths  from  measles,  whooping- 
cough,  typhus,  scarlatina,  or  diphtheria, .  .  .  while  the  gen- 
eral death-rate  of  the  children  in  these  schools  is  now  less 
than  one  third  of  the  death-rates  prevalent  among  the 
children  of  the  general  population  of  the  same  ages." 

The  science  and  practice  of  medicine  and  surgery  are, 
furthermore,  "  undergoing  a  revolution  of  such  magnitude 
and  importance  that  its  limits  can  hardly  be  conceived. 
Looking  into  the  future  in  the  light  of  recent  discoveries,  it 
does  not  seem  impossible  that  a  time  may  come  when  the 
cause  of  every  infectious  disease  will  be  known ;  when  all 
such  diseases  will  be  preventable  or  easily  curable;  when 
protection  can  be  afforded  against  all  diseases,  such  as  scar- 
let fever,  measles,  yellow  fever,  whooping-cough,  etc.,  in 
which  one  attack  secures  immunity  from  subsequent  con- 
tagion ;  when,  in  short,  no  constitutional  disease  will  be  in- 
curable, and  such  scourges  as  epidemics  will  be  unknown. 
These  results,  indeed,  may  be  but  a  small  part  of  what  will 
follow  discoveries  in  bacteriology.  The  higher  the  plane  of 
actual  knowledge  the  more  extended  is  the  horizon.  What 
has  been  accomplished  within  the  past  ten  years  as  regards 
knowledge  of  the  causes,  prevention,  and  treatment  of  dis- 
ease far  transcends  what  would  have  been  regarded  a  quarter 
of  a  century  ago  as  the  wildest  and  most  impossible  specula- 
tion."— PROF.  AUSTIN  FLINT,  M.  D.,  The  Forum,  Decem- 
ber, 1888. 

Dealers  in  ready-made  clothing  in  the  United  States  as- 
sert that  they  have  been  obliged  to  adopt  a  larger  scale  of 
sizes,  in  width  as  well  as  in  length,  to  meet  the  demands  of 
the  average  American  man,  than  were  required  ten  years 


DISEASES  OF  CIVILIZATION.  349 

ago ;  and  that  in  the  case  of  clothing  manufactured  for  the 
special  supply  of  the  whole  population  of  the  Southern  sec- 
tions of  the  country,  this  increase  in  size  since  the  war,  at- 
tributable almost  entirely  to  the  increased  physical  activity 
of  the  average  individual,  has  been  fully  one  inch  around 
the  chest  and  waist.  Varieties  of  coarse  clothing,  as  the 
brogan  shoe  and  cotton  drills,  which  before  the  war  were 
sold  in  immense  quantities  in  this  same  section  of  the  coun- 
try, have  now  almost  passed  out  of  demand,  and  been  super- 
seded by  better  and  more  expensive  products.  The  Ameri- 
can is,  therefore,  apparently  gaining  in  size  and  weight, 
which  could  not  have  happened  had  there  been  anything 
like  retrogression,  or  progress  toward  poverty  on  the  part 
of  the  masses. 

On  the  other  hand,  there  are  certain  sequences  of  the 
new  conditions  of  civilization  pertaining  to  individual  and 
societary  life  which  are  less  flattering  and  promising.  In 
the  same  ratio  as  the  facilities  for  the  production  and  distri- 
bution of  commodities  have  been  expanded  and  quickened, 
the  necessity  of  untiring  attention  to  business,  as  a  pre- 
requisite for  success,  has  been  increased,  and  the  intensity 
of  competition  stimulated.  The  forces  of  business  life  are 
no  longer  subject  to  the  control  of  the  man  of  business. 
Having  subordinated  the  lightning  to  the  demands  of  busi- 
ness, business  must  go  at  lightning  speed.  "  The  electric 
message  is  superseding  the  leisurely  letter.  There  is  now 
no  quiet  waiting  for  foreign  correspondence.  The  cable 
announces  a  bargain  struck  on  another  continent,  and  the 
same  day,  before  the  goods  have  been  even  shipped,  the 
cargo  is  sold  and  the  transaction  ended."  If  one  trader 
keeps  himself  in  instantaneous  contact  through  the  tele- 
graph with  markets  and  customers,  all  must  do  the  same,  or 
be  left  behind  in  the  struggle  for  success.  Thus  dominated 
by  new  conditions,  the  merchant  and  financier  of  to-day  has 
been  rendered  almost  as  much  of  a  machine  as  the  worker 
in  the  factories,  whose  every  movement  has  been  automatic, 

16 


350  RECENT  ECONOMIC  CHANGES. 

or  subordinate  to  the  physical  forces  acting  through  ma- 
chinery ;  and  one  result  of  the  continuous  mental  and  nerv- 
ous activity  which  modern  high-tension  methods  of  business 
have  necessitated,  coupled  with  the  high  living  and  the  fre- 
quent use  of  alcoholic  stimulants  to  which  such  activity 
leads,  has  been  to  increase  (if  not  create)  a  class  of  diseases 
which  may  be  regarded  as  diseases  of  civilization,  and  which 
have  in  turn  entailed  a  rapidly  increasing  mortality.  Thus, 
the  statistics  of  the  Health  Department  of  the  city  of  New 
York  show  that,  comparing  1870  and  1887,  the  death-rate 
from  "  Bright's  disease "  increased  from  890  to  2,375  per 
annum,  or  nearly  threefold ;  and  in  the  case  of  "heart-dis- 
ease," from  about  700  to  2,020  per  annum — an  increase 
again  of  nearly  threefold ;  and  an  increase  in  both  cases  in 
far  greater  ratio  than  any  increase  of  the  population  of  the 
city.*  Besides  the  causes  of  death  above  enumerated,  there 
is  also  a  very  serious  mortality  arising  from  what  is  com- 
monly but  vaguely  denominated  "  nervous  exhaustion,"  di- 
rectly referable  to  the  same  influences  under  consideration. 
The  accepted  statistics  for  the  European  nations  also  show 
that  the  rate  of  suicide  is  increasing.  In  France  and  Ger- 
many it  has  gone  on  increasing  steadily  through  good  years 
and  bad  years  indifferently,  until  it  is  now  more  than  fifty 
per  cent  greater  than  it  was  in  1870.  In  England  the  rate 
reached  a  maximum  in  1879,  but  was,  nevertheless,  higher  in 
1888  than  in  1870-'75.  The  marriage-rate  during  recent 
years  is  also  reported  as  declining  in  all  the  countries  of 
Europe  except  Italy,  but  not  to  a  very  notable  extent.  The 
statistics  of  divorce  in  the  United  States,  recently  collected 
by  the  order  of  the  Federal  Government,  show  an  increase 
largely  in  excess  of  the  percentage  growth  of  population. 
Thus,  the  increase  in  the  population  from  18G7  to  1886  is 
estimated  at  about  sixty  per  cent,  while  the  number  of  di- 


*  The  population  of  the  city  of  New  York  was,  in  1866,  about  750,000 ;  in 
1870,  942,000;  in  1880,  1,206,00.0;  and  in  1887,  about  1,460,000. 


CHANCES  FOR  BUSINESS  SUCCESS.  351 

**          ^*  «%       ^  *K.  1*        ^     ^^  ^  **        ^b 

vorces  for  the  last  year  of  the  period  exceeded  that  for  the 
first  year  by  156-9  per  cent.  There  has  also  been  an  increase 
in  the  proportion  of  divorces  to  the  number  of  married 
couples. 

One  curious  commercial  or  societary  phenomenon,  and 
one  which,  in  view  of  the  statement  before  submitted,  may 
seem  paradoxical,  should  not  be  overlooked  in  this  connec- 
tion— and  that  is,  that  notwithstanding  the  tendency  of  ex- 
isting conditions  to  concentrate  trade  and  manufactures  in 
the  hands  of  a  few,  with  large  capital  and  special  facilities, 
and  to  crowd  out  the  smaller  and  weaker  establishments, 
the  number  of  persons  engaging  in  trade — taking  the  ex- 
perience of  the  United  States  as  a  guide — increases  every 
year  in  a  more  rapid  rate  than  population.  This  in  turn  is 
counteracted  in  part,  but  not  wholly,  by  an  increase  in  the 
number  of  failures,  and  the  annual  retirement  of  a  much 
greater  number  of  persons  or  firms  with  the  losses  of  a  part 
or  the  whole  of  their  invested  capital — 240,QOO_firms  regis-  \ 
tered  at  one  of  the  leading  mercantile  agencies  having  \ 
ceased  to  exist  in  1888,  as  against  10,679  that  failed.  But 
for  the  frequency  of  disasters,  therefore,~the  proportion  ot^S 
the  population  of  the  United  States  seeking  to  get  a  living 
by  trading  rather  than  by  direct  production  would  be  soon 
so  great  as  to  actually  endanger  the  public  welfare.  The 
explanation  of  this  phenomenon  undoubtedly  is,  that  the 
temptations  to  a  commercial  life,  without  adequate  training 
or  capital,  are  of  constantly  increasing  strength,  while  the 
amount  of  capital  and  of  trained  skill  required  to  insure 
success  also  tends  to  increase.  The  number  of  those  who 
try  such  a  life  and  fail  each  year  consequently  enlarges.* 

*  There  has  long  been  a  substantial  agreement  among  those  competent  to 
form  an  opinion  that  ninety  ner  cent  of  all  the  men  who  try  to  do  business  on 
their  own  account  fail  of  success.  Investigations  recently  instituted  by  Mr. 
JoaepJi.H.  Walker  in  a  comparatively  old  city  ( Wojcegttsr),  in  the  long-settled 
State  of  Massachusetts,  have  led  to  the  following  interesting  conclusions :  Of 
every  hundred  men  in  business  in  that  place  in  1845,  twenty-five  were  out  of 


352  KECENT  ECONOMIC  CHANGES. 

The  steady  drift  of  population,  not  only  in  the  United  States 
but  in  all  countries  in  which  railroads  are  numerous  and 
the  art  of  reading  widely  diffused,  from  the  country  to 
towns  and  cities,  is  undoubtedly  one  of  the  sequences  of  the 
recent  changes  in  economic  conditions,  and,  as  suggestive 
of  the  impoverishment  of  rural  sections,  and  discontent  with 
agricultural  pursuits,  is  popularly  regarded  as  an  unhealthy 
social  phenomenon ;  although,  as  will  be  hereafter  pointed 
out  (see  page  433),  such  a  conclusion  may  not  be  wholly 
warranted.  In  the  State  of  Massachusetts,  the  proportion  of 
all  the  people  gathered  in  cities  and  towns  of  more  than 
eight  thousand  inhabitants  has  risen  from  less  than  one 
twentieth  a  hundred  years  ago,  and  but  little  over  a  third  in 
1850,  to  quite  two  thirds  (66'4  per  cent)  when  the  last  State 
census  was  taken  in  1885.  In  the  State  of  New  York,  with 
a  population  in  1880  of  5,082,000,  one  third  of  the  whole 
number  is  massed  in  two  cities — New  York  and  Brooklyn — 
while,  as  in  Massachusetts,  two  thirds  of  the  whole  is  gath- 
ered in  places  with  over  eight  thousand  inhabitants.  In 
England  not  only  are  farms  lying  vacant  in  great  numbers, 

business  in  five  years,  fifty  in  ten  years,  and  sixty-seven  in  fifteen  years ;  and 
most  of  these  disappearances  mean  simply  failures.  That  wealth  does  not,  as 
a  rule,  in  the  United  States  long  remain  in  the  families  of  those  who  acquire 
it  would  also  seem  to  be  shown  by  these  investigations.  Out  of  seventy-five 
manufacturers  in  1850,  only  thirty  died  or  retired  with  property ;  and  only 
six  of  the  sons  of  the  seventy-five  now  have  any  property,  or  died  leaving 
any.  There  were  one  hundred  and  seven  manufacturers  in  1860,  of  whom 
sixty  died  or  retired  with  property,  but  only  eight  of  the  sons  of  the  one 
hundred  and  seven  now  have  any  property,  or  died  leaving  any.  In  1878 
there  were  one  hundred  and  seventy-six  individuals  engaged  in  ten  of  the 
leading  manufacturing  industries  of  the  city  in  question,  but  only  fifteen  of 
this  number  were  themselves  the  sons  of  manufacturers.  Going  back  to  an 
earlier  generation,  the  above  proportion  was  found  to  be  essentially  main- 
tained ;  but  the  fact  was  not  so  striking  when  so  many  branches  of  manu- 
facturing industry  were  new,  as  they  now  appear.  Of  the  one  hundred  and 
•agBPljfcjix  manufacturers  of  1878,  moreover,  no  less  than  one  hundred  and 
sixty  -one  oomme  need  their  career  as  journeymen ;  a  fact  illustrative  of  what 
seems  to  be  almost  in  the  nature  of  an  economic  axiom,  namely,  that  the  capi- 
talists of  to-day  are  themselves  the  workingmen  of  twenty-five  years  ago,  as 
the  workingmen  of  to-day  will  be  the  capitalists  of  twenty -five  years  hence. 


DECLINE  IN  RURAL  POPULATIONS.  353 

owing  to  the  fall  in  agricultural  prices,  but  the  supply  of 
farm-labor  is  rapidly  diminishing,  in  the  face  of  a  marked 
and  steady  advance  in  wages  and  greatly  increased  induce- 
ments in  the  shape  of  improved  cottages.  There  is,  in  fact, 
an  exodus  from  the  soil  throughout  the  whole  of  Great 
Britain.  In  France,  the  same  movement  of  the  agricultural 
population  toward  the  towns  exists,  and  is  regarded  with  a 
feeling  akin  to  alarm.  According  to  M.  Baudrillard,  there 
is  a  positive  diminution  of  population  in  fifteen  of  the  rich- 
est and  most  prosperous  agricultural  departments  of  France, 
but  an  increase  in  the  population  of  their  towns.  The 
young  men,  and  especially  the  young  women,  will  not  live 
on  the  farms  if  they  can  help  it.  Agriculture  offers  greater 
inducements  than  ever  in  the  shape  of  higher  wages  and 
better  food  and  lodging,  but  these  have  little  or  no  effect  on 
the  rising  generation.  This  disinclination  for  farm-life  is, 
he  thinks,  to  be  accounted  for  in  the  same  way  as  the  small 
number  of  children  to  a  marriage.  "  Moral  progress,"  he 
says,  "has  not  marched  abreast  with  material  progress." 
Everywhere  the  aspirations  of  the  rural  classes  are  out  of 
proportion  to  their  intelligence  and  resources.  The  rise  of 
wages  has  created  a  crowd  of  more  or  less  factitious  wants, 
which  are  difficult  to  meet  and  which  keep  alive  a  constant 
sense  of  privation.  Education  has  created  in  the  farming 
man  an  intellectual  curiosity,  which  it  is  hard  to  satisfy,  and 
which  keeps  him  constantly  in  mind  of  his  isolation,  of  the 
loneliness  and  dullness  of  his  life.  One  effect  of  this  state 
of  things  in  France  is  the  influx  from  Italy  and  Belgium  of  N 
a  jejy  low  grade_of  laborers,  whom  the  farmers  are  only  too  J 
glad  to  hire  to  prevent  their  fields  lying  waste,  but  who  are 
anything  but  a  wholesome  addition  to  the  French  popula- 
tion. In  fact,  in  every  country,  wherever  we  find  the  na- 
tives abandoning  in  disgust  the  cultivation  of  the  soil,  we 
find  a  lower  grade  of  labor,  a  less  civilized  man,  who  asks 
for  less  and  is  content  with  less,  taking  their  places. 

Evidently,  the  contribution  of  greatest  value  that  could 


354  RECENT  ECONOMIC  CHANGES. 

be  made  to  the  discussion  of  this  subject,  would  be  to  spread 
before  us  an  exhibit  of  the  exact  results  of  the  experience  of 
a  country  and  a  people  where,  under  average,  or  not  too 
favorable  conditions,  the  recent  changes  in  industrial  and 
social  life,  consequent  upon  the  new  methods  of  production 
and  distribution,  have  operated  most  influentially.  Such  an 
exact  exhibit  can  not  be  made ;  but  the  experience  of  Great 
Britain,  where  economic  data  have  been  gathered  and  re- 
corded during  the  last  fifty  years  with  an  exactness  and 
completeness  not  approached  in  any  other  country,  furnishes 
a  most  gratifying  and  instructive  approximation.  To  the 
record  of  this  experience,  attention  is  next  requested. 

During  the  last  twenty-five  or  thirty  years,  the  aggregate 
wealth  of  Great  Britain,  as  also  that  of  the  United  States 
and  France,  has  increased  in  an  extraordinary  degree.  In 
Great  Britain  the  increase  from  1843  to  1885  in  the  amount 
of  property  assessable  to  the  income-tax  is  believed  to  have 
been  one  hundred  and  forty  per  cent,  and  from  1855  to 
1885  about  one  hundred  per  cent.  The  capital  subject  to 
death  duties  (legacy  and  succession  taxes)  which  was  £41,- 
000,000  in  1835,  was  £183,930,000  in  1885 ;  an  increase  in 
fifty  years  of  nearly  three  hundred  and  fifty  per  cent.  An 
estimate  of  the  total  income  of  the  country  for  1886  was 
£1,270,000,000 ;  and  of  its  aggregate  wealth,  about  £9,000,- 
000,000,  or  $45,000,000,000.*  Have  now  the  working-classes 

*  In  France,  notwithstanding  the  indemnity  of  over  a  thousand  millions  of 
dollars  paid  to  Germany  in  1872-'73,  and  a  total  governmental  expenditure, 
in  addition  to  all  ordinary  but  most  heavy  annual  expenses  since  then,  of 
7,710,000,000  francs  ($1,540,000,000),  with  enormous  losses  in  recent  years 
contingent  on  the  vine-disease,  bad  crops  of  cereals,  and  disastrous  specula- 
tions, like  the  Panama  Canal,  copper  syndicate,  and  the  like,  the  savings  of 
the  French  people  are  still  so  large  that  the  supply  of  new  capital  for  every 
enterprise  that  promises  security  or  profit  continually  tends  to  exceed  de- 
mand. Conclusive  evidence  of  the  rapid  and  enormous  increase  in  the  wealth 
of  the  United  States  is  claimed  to  be  afforded  by  the  rapid  increase  in  the 
amount  of  property  annually  made  subject  to  fire-insurance.  Thus,  the 
amount  of  fire  risks  outstanding  in  1888  was  reported  as  more  than  $900,000,- 
000  in  excess  of  the  aggregate  for  the  previous,year ;  and,  as  there  is  no  reason 


IMPROVEMENT  OF  THE  MASSES.  355 

of  Great  Britain  gained  in  proportion  with  others  in  this 
enormous  development  of  material  wealth  ?  Thanks  to  the 
labors  of  such  men  as  the  late  Dudley  Baxter  and  Leone 
Levi,  David  Chadwick,  and  Eobert  Giffen,  this  question  can 
be  answered  (comparatively  speaking  for  the  first  time)  with 
undoubted  accuracy. 

Fifty  years  ago,  one  third  of  the  working  masses  of  the 
United  Kingdom  were  agricultural  laborers ;  at  present  less 
than  one  eighth  of  the  whole  number  are  so  employed. 
Fifty  years  ago  the  artisans  represented  about  one  third  of 
the  whole  population ;  to-day  they  represent  three  fourths. 
This  change  in  the  composition  of  the  masses  of  itself  im- 
plies improvement,  even  if  there  had  been  no  increase  in  the 
wages  of  the  different  classes.  But,  during  this  same  period, 
the  "  money  "  wages  of  all  classes  of  labor  in  Great  Britain 
have  advanced  about  one  hundred  per  cent,  while  the  pur- 
chasing power  of  the  wages  in  respect  to  most  commodities, 
especially  in  recent  years,  has  been  also  very  great.  Among 
the  few  things  that  have  not  declined,  house-rent  is  the 
most  notable,  a  fact  noticed  equally  in  Great  Britain  and 
France,  although  in  both  countries  the  increase  in  the  num- 
ber of  inhabited  houses  is  very  large ;  the  increase  in  the 
item  of  houses  in  the  income-tax  assessments  of  the  United 
Kingdom  between  1875  and  1885  having  been  about  thirty- 
six  per  cent.*  But  high  rents,  in  the  face  of  considerable 
building,  are  in  themselves  proof  that  other  things  are 
cheap,  and  that  the  competition  for  comfortable  dwellings 
is  great. 

for  supposing  that  property  in  1888  was  better  insured  than  in  1887,  the  only 
means  of  accounting  for  this  great  increase  in  the  volume  of  insurance  business 
i«,  that  there  was  substantially  that  amount  of  new  wealth  added  to  the  coun- 
try on  which  insurance  was  desired.  It  would  seem  to  be  further  obvious 
that  this  gain  could  not  be  in  the  value  of  land  (for  land,  as  it  can  not  be  de- 
stroyed by  lire,  is  not  insured),  but  must  have  consisted  in  new  buildings  and 
personal  property  of  a  perishable  nature. 

*  The  houses  built  in  Great  Britain  since  1840  have  been  estimated  in  value 
at  double  the  amount  of  the  British  national  debt. 


356 


RECENT  ECONOMIC  CHANGES. 


The  Government  of  Great  Britain  keeps  and  publishes 
an  annual  record  of  the  quantities  of  the  principal  articles 
imported,  or  subject  to  an  excise  (internal  revenue)  tax, 
which  are  retained  for  home  consumption  per  head,  by  the 
total  population  of  the  kingdom.  From  these  records  the 
following  table  has  been  compiled.  From  a  humanitarian 
point  of  view,  it  is  one  of  the  most  wonderful  things  in  the 
history  of  the  latter  half  of  the  nineteenth  century : 

Per  capita  consumption  of  different  commodities  (imported  or  sub- 
ject to  excise  taxes)  by  the  population  of  Great  Britain. 


ARTICLES. 

184O. 

1886. 

1887. 

Bacon  and  hams  Ibs. 

0-01 

11-95 

11-29 

Butter  .  .  .  ' 

1-05 

7-17 

8-14 

Cheese  ' 

0-92 

5-14 

5-39 

Currants  and  raisins  ' 

1-45 

4-02 

4-34 

Eggs  No. 

3-63 

28-12 

29-37 

Rice  Ibs. 

0-90 

10-75 

7-69 

Cocoa  ' 

0-08 

0-41 

0-43 

Coffee  ' 

1-08 

0-86 

0-79 

Wheat  and  wheat-  flour  ' 

42-47 

185-76 

220-75 

Raw  sugar  ' 

15-20 

47-21 

52-95 

Refined  sugar      ' 

None. 

18-75 

20-25 

Tea  " 

1-22 

4-87 

4-95 

Tobacco  " 

0-86 

1-42 

1-44 

Wine    ....         .       gals. 

0-25 

0-36 

0-37 

Spirits  (foreign)  " 

0-14 

0-24 

0-23 

Spirits  (British)  " 

0-83 

0-73 

0-72 

Malt  bush. 

1-59 

1-64* 

Beer  (1881)  gals. 

27-78 

26-61 

26-90 

During  all  the  period  of  years  covered  by  the  statistics 
of  this  table,  the  purchasing  power  of  the  British  people  in 
respect  to  the  necessities  and  luxuries  of  life  has  therefore 
been  progressively  increasing,  and  has  been  especially  rapid 
since  1873-'76.  Converting  this  increase  in  the  purchasing 
power  'of  wages  into  terms  of  money,  the  British  workman 
can  now  purchase  an  amount  of  the  necessaries  of  life  for 
28s.  5rf.,  which  in  1839  would  have  cost  him  34s.  0£rf.f  But 


1879. 


t  David  Chadwick,  British  Association,  1887. 


EQUALIZATION  OF  WEALTH  IN  GREAT  BRITAIN.  357 

this  statement  falls  very  far  short  of  the  advantages  that  have 
accrued  to  him,  for  wages  in  Great  Britain,  as  before  stated, 
are  fully  one  hundred  per  cent  higher  at  the  present  time 
than  they  were  in  1839. 

The  impression  probably  prevails  very  generally  in  all 
countries  that  the  capitalist  classes  are  continually  getting 
richer  and  richer,  while  the  masses  remain  poor,  or  become 
poorer.  But  in  Great  Britain,  where  alone  of  all  countries 
the  material  (i.  e.,  through  long- continued  and  systematized 
returns  of  incomes  and  estates  [probate]  for  taxation)  ex- 
ists for  scientific  inquiry,  the  results  of  investigations  dem- 
onstrate that  this  is  not  the  case. 

In  the  case  of  estates,  the  number  subjected  to  legacy  £\  l~ 
and  succession  duties  within  the  last  fifty  years  has  increased 
in  a  ratio  double  that  of  the  population,  but  the  average        ^ 
amount  of  property  per  estate  has  not  sensibly  augmented.  ^1       - 
If,  therefore,  wealth  among  the  capitalist  classes  has  greatly £*<  o  \ 
increased,  as  it  has,  there  are  more  owners  of  it  than  ever        I 
before ;  or,  in  other  words,  wealth,  to  a  certain  extent,  is 
more  diffused  than  it  was.     Of  the  whole  number  of  estates 
that  were  assessed  for  probate  duty  in  Great  Britain  in  1886, 
77'5  per  cent  were  for  estates  representing  property  under 
£1,000  ($5,000). 

In  the  matter  of  national  income,  a  study  of  its  increase 
and  apportionment  among  the  different  classes  in  Great 
Britain  has  led  to  the  following  conclusions :  Since  1843, 
when  the  income-tax  figures  begin,  the  increase  in  national 
income  is  believed  to  have  been  £755,000,000.  Of  this 
amount,  the  income  from  the  capitalist  classes  increased 
about  one  hundred  per  cent,  or  from  £190,000,000  to  £400,- 
000,000.  But,  at  the  same  time,  the  number  of  the  capital- 
ist classes  increased  so  largely  that  the  average  amount  of 
capital  possessed  among  them  per  head  increased  only  fifteen 
per  cent,  although  the  increase  in  capital  itself  was  in  excess 
of  one  hundred  and  fifty  per  cent.  In  the  case  of  the  "  up- 
per "  and  "  middle  "  classes,  the  income  from  their  "  work- 


358  RECENT  ECONOMIC  CHANGES. 

ing  "  increased  from  £154,000,000  to  £320,000,000,  or  about 
one  hundred  per  cent ;  while,  in  the  case  of  the  masses  (i.  e., 
the  manual  labor  classes),  which  have  increased  in  popula- 
tion only  thirty  per  cent  since  1843,  the  increase  of  their 
incomes  has  gone  up  from  £171,000,000  to  £550,000,000,  or 
over  two  hundred  per  cent.  Between  1877  and  1886  the 
number  of  assessments  in  Great  Britain  for  incomes  between 
£150  (1750)  and  £1,000  ($5,000)  increased  19-26  per  cent, 
while  the  number  of  assessments  for  incomes  of  £1,000  and 
upward  decreased  2-4  per  cent.*  What  has  happened  to  all 
that  large  class  whose  annual  income  does  not  reach  the 
taxable  limit  (£150)  is  sufficiently  indicated  by  the  fact  that 
while  population  increases  pauperism  diminishes. 

Thus,  in  the  United  Kingdom,  during  the  last  fifty 
years,  the  general  result  of  all  industrial  and  societary  move- 
ment, according  to  Mr.  Giffen,  has  been,  that  "  the  rich  have 
become  more  numerous/Dut  not  richer  individually;  the 
'  poor  '  are,  to  some  smaller  extent,  fewer ;  and  those  who 
remain  '  poor '  are,  individually,  twice  as  well  off  on  the  aver- 
age as  they  were  fifty  years  ago.  The  poor  have  thus  had 
almost  all  the  benefit  of  the  great  material  advance  of  the 
last  fifty  years." 


*  The  following  table  shows  how  wealth  is  distributed  in  the  different 
classes  of  income-tax-payers  in  Great  Britain  under  Schedule  D,  which  com- 
prises incomes  from  profits  on  trades  and  employments : 

"  In  1887  the  number  of  assessments  of  incomes  from  £150  to  £500  was 
285,754,  and  in  1886  it  was  347,031,  showing  an  increase  of  21-4  per  cent ;  of 
incomes  between  £500  and  £1,000,  the  numbers  were,  in  1877,  32,085,  and  in 
1886,  32,033,  no  increase  at  all ;  of  incomes  between  £1,000  and  £5,000,  the 
numbers  were,  in  1877, 19,726,  and  in  1886,  19,250,  a  decrease  of  2-4  per 
cent ;  and  of  the  incomes  over  £5,000,  the  numbers  were,  in  1877,  3,122,  and 
in  18SS,  3,048,  a  decrease  of  2-3  per  cent.  It  results  that  from  these  figures  the 
increase  of  the  income-tax  during  times  of  depression  and  during  ordinary 
times,  during  the  times  which  we  have  been  going  through  and  which  have 
not  been  times  of  great  prosperity,  there  has  been  a  most  satisfactory  increase 
in  the  incomes  below  £500,  while  no  similar  increase  is  seen  in  the  incomes 
between  £500  and  £1,000,  and  upward."— MB  GOSCHEN,  "  On  tTte  Distribu- 
tion of  Wealth,"  Royal  Statistical  Society  of  England,  1887. 


BRITISH  NATIONAL  SCHOOL  SYSTEM.  359 

The  following  further  citations  from  the  record  of 
the  recent  economic  experiences  of  Great  Britain  are  also 
strongly  confirmatory  of  the  above  conclusions : 

The  amount  of  life-assurance  in  the  United  Kingdom 
exceeds  that  of  any  other  country ;  having  risen  from  £179,- 
900,000  ($872,214,000)  in  1856  to  £426,600,000  ($2,073,- 
376,000)  in  1885.  The  record  further  shows  a  very  rapid 
increase  in  the  number  of  policies  issued,  while  the  average 
amount  of  the  policies  continues  small ;  the  meaning  of 
which  clearly  is,  that  a  larger  number  of  people  are  not  only 
continually  becoming  provident,  but  able  to  insure  them- 
selves for  small  amounts. 

The  amount  of  savings  invested  in  the  co-operative  stores 
of  Great  Britain,  in  which  her  working-classes  are  especially 
interested,  was  estimated  in  1888  to  be  adequate  for  the 
handling  of  a  retail  business  exceeding  a  hundred  million 
dollars  per  annum. 

The  changes  in  the  relations  of  crime  and  of  educational 
facilities  during  the  last  fifty  years  of  the  history  of  the 
British  people,  which  have  occurred  and  are  still  in  progress, 
are  in  the  highest  degree  encouraging.  In  1839  the  num- 
ber of  criminal  offenders  committed  for  trial  was  54,000  ;  in 
England  alone,  24,000.  Now  the  corresponding  figures 
(1887)  were,  United  Kingdom,  18,305  ;  England,  13,292. 
In  1840  one  person  for  every  500  of  the  population  of  the 
British  Islands  was  a  convict ;  in  1885  the  proportion  was 
as  one  to  every  4,100. 

As  late  as  1842  there  was  no  national  school  system  in 
England,  and  there  were  towns  with  populations  in  excess 
of  100,000  in  which  there  was  not  a  single  public  day-school 
and  not  a  single  medical  charity.  Now  education  has  be- 
come one  of  the  principal  cares  of  the  nation.  In  1884  the 
number  of  attendants  upon  schools  in  the  United  Kingdom 
was  reported  at  5,250,000.  In  1887  the  number  in  attend- 
ance upon  schools,  for  the  support  of  which  grants  of  money 
are  made  by  Parliament  (and  which  correspond  to  the  pub- 


360  RECENT  ECONOMIC  CHANGES. 

lie  schools  of  the  United  States)  was  4,019,116,  an  increase 
over  the  preceding  year  of  103,801.  The  amount  of  such 
parliamentary  grants  for  1887  was  —  including  Ireland — 
$24,617,965  ;  increase  over  1886  of  $1,431,005.  If  we  gauge 
the  efficiency  of  the  British  educational  system  in  1887  with 
what  it  was  in  1870  by  the  number  of  teachers  employed, 
the  results  are  equally  remarkable.  In  1870  there  were  only 
12,467  certificated  and  1,262  assistant-masters,  while  in  1887 
there  were  43,628  certificated  and  18,070  assistant-masters 
engaged  in  teaching  in  the  elementary  schools.  The  amount 
of  money  expended  in  erecting,  enlarging,  and  improving 
"  voluntary  "  schools  in  Great  Britain,  which  came  under 
the  inspection  of  the  Government  since  1870,  amounts  to 
£6,000,000  ($29,160,000).  One  illustration  of  the  effect  of 
this  greater  attention  to  education  upon  the  masses  of  the 
people  of  Great  Britain  is  found  in  the  fact  that,  while  in 
1855,  35-4  per  cent  of  the  persons  contracting  marriage 
signed  the  register  with  their  mark,  in  1885  only  12'9  per 
cent  did  so. 

The  change  which  has  taken  place  in  the  relations  of 
the  Government  of  Great  Britain  to  the  national  life  of  its 
people  is  also  very  remarkable.  Thus,  at  the  commencement 
of  the  present  century  the  British  Government  annually 
appropriated  and  spent  about  one  third  of  the  national  in- 
come ;  now  it  expends  annually  about  one  twelfth.  But  for 
this  greatly  diminished  expenditure  the  masses  of  the  people 
now  receive  an  immensely  greater  return  than  ever  before : 
in  the  shape  of  increased  postal  and  educational  facilities, 
safer  navigation,  greater  expenditures  for  the  maintenance 
of  the  public  health  and  public  security,  greater  effort  for 
preventing  abuses  of  labor,  etc.  Another  notable  thing  is 
the  extent  to  which  the  poorer  classes  of  Great  Britain  have 
been  relieved  from  immediate  burdens  of  taxation.  The 
taxes  which  they  have  to  bear,  as  is  the  case  in  the  United 
States,  fall  primarily  on  commodities,  and  are  included  in 
national  accounts  under  the  heads  of  customs  and  excise. 


RECENT  PROGRESS  OF  THE  BRITISH  PEOPLE.  361 

In  1836  the  receipts  per  head  of  population  from  these 
sources  were  30s.  6t?.,  and  in  1886  24s.  6d.  But  of  these  rev- 
enues the  largest  proportion  is  derived  from  the  taxes  on 
liquors  and  tobacco,  which  are  pure  luxuries ;  and  if  such 
taxes  be  deducted  and  allowed  for,  the  taxation  of  Great 
Britain  through  her  excise  and  customs,  which  was  15s.  Gd. 
per  head  on  the  necessaries  or  semi-necessaries  of  life  in 
1836,  was  not  more  than  5s.  per  head  in  1886.  Again, 
with  an  increase  in  population  from  27,800,000  in  1855 
to  36,300,000  in  1885,  or  thirty  per  cent,  and  without  a 
single  additional  acre  of  land  to  place  them  upon,  the 
physical,  intellectual,  and  moral  condition  of  the  British 
people  has  steadily  improved ;  the  consumption  of  spirits, 
in  illustration,  having  declined  in  Great  Britain,  during 
the  last  decade,  to  an  extent  sufficient  to  materially 
affect  the  national  income.*  Between  1881  and  1888 
the  national  debt  of  Great  Britain  was  reduced  by  the 
sum  of  $302,846,940 ;  or  from  $3,830,722,305  to  $3,527,- 
875,365. 

The  general  conclusion  from  all  these  facts,  as  Mr.  Giffen 
has  expressed  it,  is,  that  what  "  has  happened  to  the  working- 
classes  in  Great  Britain  during  the  last  fifty  years  is  not  so 
much  what  may  properly  be  called  an  improvement,  as  a 
revolution  of  the  most  remarkable  description."  And  this 
progress  for  the  better  has  not  been  restricted  to  Great  Brit- 
ain, but  has  been  simultaneously  participated  in  to  a  greater 
or  less  extent  by  most  if  not  all  other  countries  claiming  to 
be  civilized.  So  far  as  similar  investigations  have  been  in- 
stituted in  the  United  States,  the  results  are  even  more 
favorable  than  in  Great  Britain.  If  they  have  not  been 
equally  favorable  in  other  than  these  two  countries,  we  have 
a  right  to  infer  that  it  has  been-  because  the  people  of  the 

*  The  decline  in  the  British  revenues  from  taxes  on  "home  "and  "  for- 
eign "  spirits,  from  1876  to  1887,  was  £4,140,000  ($21,000,000);  whereas,  if 
consumption  had  kept  pace  with  the  growth  of  population,  there  would  have 
been  an  increase  during  tLia  same  period  of  over  £2,000,000. 


362  RECENT  ECONOMIC  CHANGES. 

former  have  not  only  started  in  their  career  of  progress  from 
a  lower  level  of  civilization  and  race  basis  than  the  latter, 
but  have  had  more  disadvantages — natural  and  artificial — 
than  the  people  of  either  Great  Britain  or  the  United  States. 
The  average  earnings  per  head  of  the  people  of  countries 
founded  by  the  Anglo-Saxon  race  are  confessedly  larger 
than  those  of  all  other  countries.* 

But  some  may  say :  This  is  all  very  interesting  and  not 
to  be  disputed.  But  how  does  it  help  us  to  understand  better, 
and  solve  the  industrial  and  social  problems  of  to-day,  when 
the  cry  of  discontent  on  the  part  of  the  masses  is  certainly 
louder,  and  the  inequality  of  condition,  want,  and  suffering 
is  claimed  to  be  greater  than  ever  before  ?  In  this  way : 

The  record  of  progress  in  Great  Britain  above  described 
is  indisputably  a  record  that  has  been  made  under  circum- 
stances that,  if  not  wholly  discouraging,  were  certainly  un- 
favorable. It  is  the  record  of  a  country  densely  populated 
and  of  limited  area,  with  the  ownership,  or  free  use  of  land, 
restricted  to  the  comparatively  few;  with  (until  recent 
years)  the  largest  national  debt  known  in  history;  with  a 
heavy  burden  of  taxation  apportioned  on  consumption  rather 
than  on  accumulated  property,  and  the  reduction  of  which, 
a  participation  in  constant  wars  and  enormous  military  and 
naval  expenditures  have  always  obstructed  or  prevented ;  with 
a  burden  of  pauperism  at  the  outset,  and,  indeed,  for  the 
first  half  of  the  period  under  consideration,  which  almost 
threatened  the  whole  fabric  of  society  ;  and,  finally,  with  a 
long-continued  indisposition  on  the  part  of  the  governing 
classes  to  make  any  concessions  looking  to  the  betterment 


*  A  recent  British  authority  makes  the  highest  average  earnings  per  head 
in  any  country  to  be  in  Australia,  namely,  £43  4s.  Next  in  order,  he  places 
the  United  Kingdom,  with  an  average  per  capita  earning  capacity  of  £35  4*. ; 
then  the  United  States,  with  an  average  capacity  of  £27  4s. ;  and  next,  Can- 
ada, with  an  average  of  £26  18s.  For  the  Continent  of  Europe  the  average  is 
estimated  at  £18  1*. — SIK  RICHARD  TEMPLE,  "  Journal  of  the  Royal  Statistical 
Society,"  September,  1884,  p.  476. 


HIGHER  VANTAGE-GROUND  OF  HUMANITY.     363 

of  the  masses,  except  under  the  pressure  of  influences  which 
they  had  little  or  no  share  in  creating.  And  yet,  without 
any  "violent  specifics,"  or  radical  societary  changes,  and 
apart  from  any  force  of  statute  law,  except  so  far  as  statute 
law  has  been  an  instrumentality  for  making  previously 
existing  changes  in  public  sentiment  effective ;  but  rather 
through  the  steady  working  of  economic  laws  under  con- 
tinually increasing  industrial  and  commercial  freedom,  the 
working  masses  of  Great  Britain,  "  in  place  of  being  a  de- 
pendent class,  without  future  and  without  hope,  have  come 
into  a  position  from  which  they  may  reasonably  expect  to 
advance  to  any  degree  of  comfort  and  civilization." 

Now,  with  humanity  occupying  a  higher  vantage-ground 
in  every  respect  than  ever  before ;  with  a  remarkable  increase 
in  recent  years  in  its  knowledge  and  control  of  the  forces  of 
nature — the  direct  and  constant  outcome  of  which  is  to 
increase  the  abundance  of  all  useful  and  desirable  commodi- 
ties in  a  greater  degree  than  the  world  has  ever  before  ex- 
perienced, and  to  mitigate  the  asperities  and  diminish  the 
hours  of  toil — is  it  reasonable  to  expect  that  further  progress 
in  this  direction  is  to  be  arrested  ?  Is  the  present  genera- 
tion to  be  less  successful  in  solving  the  difficult  social  prob- 
lems that  confront  it  than  were  a  former  generation  in 
solving  like  problems  which  for  their  time  were  more  diffi- 
cult and  embarrassing  ?  If  the  answer  is  in  the  negative, 
then  there  is  certainly  small  basis  for  pessimistic  views  re- 
specting the  effect  of  the  recent  industrial  and  social  tran- 
sitions in  the  future. 

But,  in  view  of  these  conclusions,  what  are  the  reasons 
for  the  almost  universal  discontent  of  labor  ? 


IX. 

The  discontent  of  labor — Causes  for — Displacement  of  labor — Eesults  of  the 
invention  of  stocking-making  machinery — Increased  opportunity  for  em- 
ployment contingent  on  Arkwright's  invention — Destructive  influences  of 
material  progress  on  capital — Effect  of  the  employment  of  labor-saving 
machinery  on  wages — On  agricultural  employments — Extent  of  labor 
displacement  by  machinery — The  cause  of  Irish  discontent  not  altogether 
local — Impoverishment  of  French  proprietors — Is  there  to  be  an  anarchy 
of  production  ? — Effect  of  reduction  of  price  on  consumption — On  oppor- 
tunities for  labor — Illustrative  examples — Influence  of  taxation  on  restrain- 
ing consumption — Experiences  of  tolls  on  Brooklyn  Bridge — Character- 
istics of  different  nationalities  in  respect  to  the  consumption  of  commodi- 
ties— Creation  of  new  industries — Effect  of  import  taxes  on  works  of  art 
— Tendency  of  over-production  to  correct  itself— Present  and  prospective 
consumption  of  iron — Work  breeds  work — Pessimistic  views  not  pertinent 
to  present  conditions. 

THE  causes  of  the  almost  universal  discontent  of  labor, 
which  has  characterized  the  recent  transitions  in  the  world's 
methods  of  production  and  distribution,  and  which,  inten- 
sified by  such  transitions,  have  been  more  productive  of 
disturbances  than  at  any  former  period  (for,  as  previously 
shown,  there  are  really  no  new  factors  concerned  in  the  ex- 
periences under  consideration),  would  seem  to  be  mainly 
these : 

1.  The  displacement  or  supplanting  of  labor  through 
more  economical  and  effective  methods  of  production  and 
distribution. 

2.  Changes  in  the  character  or  nature  of  employments 
consequent  upon  the   introduction  of  new  methods — ma- 
chinery or  processes — which  in  turn  have  tended  to  lower 
the  grade  of  labor,  and  impair  the  independence  and  restrict 
the  mental  development  of  the  laborer. 


THE  DISCONTENT  OF  LABOR.  3G5 

3.  The  increase  in  intelligence,  or  general  information, 
on  the  part  of  the  masses,  in  all  civilized  countries. 

To  a  review  of  the  character  and  influence  of  these  sev- 
eral causes,  separately  and  in  detail,  attention  is  next  in- 
vited. 

And,  first,  as  to  the  extent  and  influence  of  the  dis- 
placement of  labor  through  more  economical  and  effective 
methods  of  production  and  distribution.  Of  the  injury  thus 
eccasioned,  and  of  the  suffering  attendant,  no  more  pitiful 
and  instructive  example  of  recent  date  could  be  given  than 
the  following  account,  furnished  to  the  United  States  De- 
partment of  State,*  of  the  effect  of  the  displacement  of 
hand-loom  weaving  in  the  city  of  Chemnitz,  Saxony,  by  the 
introduction  and  use  of  the  power-loom : 

In  1875  there  were  no  less  than  4,519  of  the  so-called  ^master- 
weavers  "  in  Chemnitz,  each  of  whom  employed  from  one  to  ten  jour- 
neymen at  hand-loom  weaving  in  his  own  house.  The  introduction 
of  machinery,  however,  imposed  conditions  upon  these  weavers  which 
they  found  the  more  difficult  to  meet  the  more  the  machinery  was  im- 
proved. The  plainer  goods  were  made  on  power-looms,  and  work  in 
the  factories  was  found  to  be  more  remunerative.  Instead  of  giving 
work  to  others,  they  were  gradually  compelled  to  seek  work  for  them- 
selves. The  independent  "  master  "  soon  fell  into  ranks  with  the  de- 
pendent factory-hand,  but  as  he  grew  older  and  his  eye-sight  failed  him 
he  was  replaced  by  younger  and  more  active  hands,  and  what  once 
promised  to  become  a  well-to-do  citizen  in  his  old  age  now  bids  fair  to 
become  a  burden  upon  the  community.  Those  who  had  means  of  pro- 
curing the  newer  Jacquard  contrivance,  or  even  the  improved  "  leaf  " 
or  "  shaft-looms,"  managed  to  eke  out  a  subsistence ;  but  the  prospects 
of  the  weavers  who  have  learned  to  work  only  with  the  hand-looms  are 
becoming  more  hopeless  every  day. 

Now,  while  such  cases  of  displacement  of  labor  appeal 
most  strongly  to  human  sympathy,  and  pre-eminently  con- 
stitute a  field  for  individual  or  societary  action  for  the  pur- 
pose of  relief,  it  should  be  at  the  same  time  remembered 

»  Report  of  United  States  Consul  George  C.  Tanner,  Chemnitz,  December, 
1886. 


366  RECENT  ECONOMIC  CHANGES. 

that  the  world,  especially  during  the  last  century,  has  had  a 
large  experience  in  such  matters,  and  that  the  following 
points  may  be  regarded  as  established  beyond  the  possibility 
of  contradiction  :  1.  That  such  phases  of  human  suffering 
are  now,  always  have  been,  and  undoubtedly  always  will  be, 
the  inevitable  concomitants  of  the  progress  of  civilization,  or 
the  transitions  of  the  life  of  society  to  a  higher  and  better 
stage.  They  seem  to  be  in  the  nature  of  "  growing-pains," 
or  of  penalty  which  Nature  exacts  at  the  outset,  but  for 
once  only,  whenever  mankind  subordinates  her  forces  in 
greater  degree  to  its  own  will  and  uses.  2.  That  it  is  not 
within  the  power  of  statute  enactment  to  arrest  such  tran- 
sitions, even  when  a  large  and  immediate  amount  of  human 
suffering  can  certainly  be  predicated  as  their  consequent, 
except  so  far  as  it  initiates  and  favors  a  return  of  society 
toward  barbarism ;  for  the  whole  progress  in  civilization 
consists  in  accomplishing  greater  or  better  results  with  the 
same  or  lesser  effort,  physical  or  mental.  3.  All  experience 
shows  that,  whatever  disadvantage  or  detriment  the  intro- 
duction and  use  of  new  and  improved  instrumentalities  or 
methods  of  production  and  distribution  may  temporarily 
entail  on  individuals  or  classes,  the  ultimate  result  is  always 
an  almost  immeasurable  degree  of  increased  good  to  man- 
kind in  general.  In  illustration  and  proof  of  this,  attention 
is  asked  to  the  following  selection  from  the  record  of  a 
great  number  of  well-ascertained  and  pertinent  experiences : 
The  invention  of  the  various  machines  which  culmi- 
nated in  the  knitting  or  weaving  of  stockings  by  machinery 
in  place  of  by  hand,  occasioned  great  disturbances  about  the 
commencement  of  the  present  century  among  a  large  body 
of  operatives  in  the  counties  of  Leicester  and  Nottingham, 
in  England,  who  had  been  educated  to  old  methods  of  stock- 
ing-making and  were  dependent  upon  the  continued  prose- 
cution of  them  for  their  immediate  livelihood.  The  new 
stocking-frames  as  they  were  introduced  were  accordingly 
destroyed  by  the  handicraft  workmen  as  opportunity  favored 


DISPLACEMENT  OF  LABOR  BY  MACHINERY.     367 

(over  one  thousand  in  a  single  burst  of  popular  fury),  houses 
were  burned,  the  inventors  were  threatened  and  obliged  to 
fly  for  their  lives,  and  order  was  not  finally  restored  until 
the  military  had  been  called  out  and  the  leading  rioters  had 
been  arrested  and  either  hanged  or  transported.  Looking 
back  over  the  many  years  that  have  elapsed  since  this  special 
labor  disturbance  (one  of  the  most  notable  in  history),  the 
first  impulse  is  to  wonder  at  and  condemn  what  now  seems 
to  have  been  extraordinary  folly  and  wrong  on  the  part  of 
the  masses,  in  attempting  to  prevent  by  acts  of  violence  the 
supersedure  of  manual  labor  engaged  in  making  stockings 
through  the  introduction  and  use  of  ingenious  stocking- 
making  machinery.  But,  on  the  other  hand,  when  one 
remembers  the  number  of  persons  who,  with  very  limited 
opportunity  for  any  diversity  of  their  industry,  and  with  the 
low  social  and  mental  development  incident  to  the  period, 
found  themselves  all  at  once  and  through  no  fault  of  their 
own  deprived  of  the  means  of  subsistence  for  themselves  and 
their  families,  and  are  further  told  by  the  historian  of  the 
period  *  that,  from  the  hunger  and  misery  entailed  by  this 
whole  series  of  events,  the  larger  portion  of  fifty  thousand 
English  stocking-knitters  and  their  families  did  not  fully 
emerge  during  the  next  forty  years,  there  is  a  good  deal  to 
be  set  down  to  and  pardoned  on  account  of  average  human 
nature.  The  ultimate  result  of  the  change  in  the  method  of 
making  stockings  and  its  accompanying  suffering  has,  how- 
ever, unquestionably  been  that  for  every  one  person  poorly 
fed,  poorly  paid,  badly  clothed,  and  miserably  housed,  who  at 
the  commencement  of  the  present  century  was  engaged  in 
making  stockings  on  hand-looms  or  in  preparing  the  ma- 
terials out  of  which  stockings  could  be  made,  one  hundred 
at  least  are  probably  now  so  employed  for  a  third  less  num- 
ber of  hours  per  week,  at  from  three  to  seven  times  greater 


*  "  History  of  the  Machine-wrought  Hosiery  Manufactures,"  by  William 
Felkin,  Cambridge,  England,  1867. 


368  RECENT  ECONOMIC  CHANGES. 

average  wages,  and  living  under  conditions  of  comfort  that 
their  predecessors  could  hardly  have  even  anticipated.* 

The  following  positive  statistical  data,  derived  from  an- 
other department  of  textile  industry,  will  also  show  that  in 
these  statements  there  is  nothing  of  assumption  and  over- 
estimate, but  rather  a  failure  to  present  the  magnitude  of 
the  actual  results.  Thus,  Arkwright  invented  his  cotton- 
spinning  machinery  in  1760.  At  tEat  time  it  was  estimated 
that  there  were  in  England  5,200  spinners  using  the  spin- 
ning-wheel, and  2,700  weavers ;  in  all,  7,900  persons  engaged 
in  the  production  of  cotton  textiles.  The  introduction  of 
this  invention  was  opposed,  on  the  ground  that  it  threatened 
the  ruin  of  these  work-people ;  but  the  opposition  was  put 
down  (in  some  instances  by  force),  and  the  machine  brought 
into  practical  use.  Note  next  what  followed.  In  1787 — or 
twenty-seven  years  subsequent  to  the  invention — a  parlia- 
mentary inquiry  showed  that  the  number  of  persons  actually 
engaged  in  the  spinning  and  weaving  of  cotton  had  risen 
from  7,900  to  320,000,  an  increase  of  4,400  per  cent.  In 
1833,  including  the  workmen  engaged  in  subsidiary  in- 
dustries, such  as  calico-printing,  this  number  had  increased 
to  800,000 ;  and  at  the  present  time  the  number  who  di- 
rectly find  employment  in  Great  Britain  in  manufacturing 
cotton  is  at  least  2,500,000. 

In  strong  contrast  also  with  the  report  of  the  pitiful  dis- 
tress of  the  displaced  hand-loom  weavers  of  Saxony  comes 
this  other  statement  from  many  sources:  That  in  all  the 
great  manufacturing  centers  of  Germany,  and  especially  in 

*  The  wages  of  the  stocking-knitters  in  Leicestershire  in  the  early  years  of 
this  century  were  among  the  very  lowest  paid  in  any  branch  of  industry  in 
Great  Britain,  and  did  not  exceed  on  an  average  six  shillings  a  week.  In  1880 
the  wages  paid  first-class  operatives  (men)  in  the  hosiery -factory  of  the  late 
A.  T.  Stewart,  at  Nottingham,  England,  were  44s.  5d.  per  week,  and  for  girls 
of  similar  capabilities  16s.  6d.  Within  more  recent  years  further  improve- 
ments in  machinery,  by  creating  a  disproportion  between  the  supply  of  the 
labor  of  framework-knitters  and  the  demand  for  it,  has  again  greatly  disturbed 
the  condition  of  the  work-people  in  this  branch  of  industry  in  England. 


LAW  OF  THE  DESTRUCTION  OF  CAPITAL.        369 

the  cities  of  Chemnitz  (where  the  hand-looms  are  being 
rapidly  displaced),  in  Crefeld,  Essen,  and  in  Diisseldorf,  the 
standard  of  living  and  of  comfort  among  the  masses  is  far 
higher  than  at  any  former  period.  Writing  from  Mayence 
under  date  of  January,  1887,  United  States  Commercial 
Agent  J.  H.  Smith  reports  that, "  although  business  is  in  an 
unsatisfactory  state,  it  does  not  seem  to  affect  the  working- 
man  greatly.  Wages  remain  pretty  much  the  same,  and 
few  discharges  of  hands  take  place.  The  stagnant  state  of 
the  market  only  serves  to  make  the  necessaries  of  life 
cheaper,  and  to  enhance  the  purchasing  power  of  the  labor- 
er's money."  United  States  Consul-General  Eaine,  at 
Berlin,  during  the  same  month,  also  reported  that  "  wages 
in  Germany  show  a  rising  tendency";  that  workingmen 
with  permanent  work,  and  wages  unchanged,  are  deriving 
marked  advantages  from  the  low  prices  of  provisions ;  and 
that,  although  the  population  of  Germany  has  experienced 
an  increase  of  three  millions  since  1879,  "  no  lack  of  work 
was  noticeable." 

The  readiness  with  which  society  comprehends  the  suf- 
fering contingent  on  the  relentless  displacement  of  labor 
by  more  economical  and  effective  methods  of  production 
and  distribution,  and  the  overmastering  feelings  of  sym- 
pathy for  individual  distress  thereby  occasioned,  cause  it 
to  generally  overlook  another  exceedingly  interesting  and 
important  involved  factor,  and  that  is  the  relentless  im- 
partiality with  which  the  destructive  influences  of  material 
progress  coincidently  affect  capital  (property)  as  well  as 
labor.  It  seems  to  be  in  the  nature  of  a  natural  law  that  no 
advanced  stage  of  civilization  can  be  attained,  except  at  the 
expense  of  destroying  in  a  greater  or  less  degree  the  value  of 
the  instrumentalities  by  which  all  previous  attainments  have 
been  effected.  Society  proffers  its  highest  honors  and  re- 
wards to  its  inventors  and  discoverers ;  but,  as  a  matter  of 
fact,  what  each  inventor  or  discoverer  is  unconsciously  try- 
ing to  do  is  to  destroy  property,  and  his  measure  of  success 


370  RECENT  ECONOMIC  CHANGES. 

and  reward  is  always  proportioned  to  the  degree  to  which 
he  effects  such  destruction.  If  to-morrow  it  should  be 
announced  that  some  one  had  so  improved  the  machinery  of 
cotton-manufacture  that  ten  per  cent  more  of  fiber  could  be 
spun  and  woven  in  a  given  time  with  no  greater  or  a  less 
expenditure  of  labor  and  capital  than  heretofore,  all  the 
existing  machinery  in  all  the  cotton-mills  of  the  world, 
representing  an  investment  of  millions  upon  millions  of 
dollars,  would  be  worth  little  more  than  so  much  old  iron, 
steel,  and  copper;  and  the  man  who  should  endeavor  to 
resist  that  change  would,  in  face  of  the  fierce  competition  of 
the  world,  soon  find  himself  bankrupt  and  without  capital. 
In  short,  all  material  progress  is  effected  by  a  displacement 
of  capital  equally  with  that  of  labor ;  and  nothing  marks  the 
rate  of  such  progress  more  clearly  than  the  rapidity  with 
which  such  displacements  occur.  There  is,  however,  this 
difference  between  the  two  factors  involved :  Labor  displaced, 
as  a  condition  of  progress,  will  be  eventually  absorbed  in 
other  occupations;  but  capital  displaced,  when  new  ma- 
chinery is  substituted  for  old,  is  practically  destroyed. 

It  has  previously  been  pointed  out  that  the  great  and 
signal  result  of  the  recent  extraordinary  material  progress 
has  been  to  increase  the  abundance  and  reduce  the  price  of 
most  useful  and  desirable  commodities.  But  this  statement 
applies  to  capital,  as  a  commodity,  in  common  with  other 
commodities;  and  here  comes  in  another  very  significant 
and,  from  a  humanitarian  point  of  view,  a  most  important 
result,  or  perhaps  rather  a  "  law  "  (pointed  out  years  ago  by 
Bastiat,  and  in  proof  of  which  evidence  will  be  presently 
submitted),  that,  "  in  proportion  to  the  increase  of  capital, 
the  relative  share  of  the  total  product  falling  to  the  capitalist 
is  diminished,  while,  on  the  contrary,  the  laborer's  share  is 
relatively  increased.  At  the  same  time  all  progress,  from 
scarcity  to  abundance,  tends  to  increase  also  the  absolute 
share  of  product  to  both  capitalist  and  laborer,  inasmuch  as 
there  is  more  to  divide." 


INFLUENCE  OF  MACHINERY  ON  WAGES.          371 

Again,  it  is  a  singular  anomaly  that,  while  an  increasing 
cost  of  labor  has  been  the  greatest  stimulant  to  the  inven- 
tion and  introduction  of  labor-saving  machinery,  labor  em- 
ployed in  connection  with  such  machinery  generally  com- 
mands a  better  price  than  it  was  able  to  do  when  similar 
results  were  effected  by  more  imperfect  and  less  economical 
methods.  Perhaps  the  most  remarkable  illustration  of  this 
is  to  be  found  in  the  experience  of  the  American  manufact- 
ure of  flint-glass,  in  which  a  reduction,  since  1870,  of  from 
seventy  to  eighty  per  cent  in  the  market  price  of  such 
articles  of  glass  table-ware  as  goblets,  tumblers,  wine-glasses, 
bowls,  lamps,  and  the  like,  consequent  upon  the  adoption  of 
methods  greatly  economizing  labor  and  improving  quality, 
has  been  accompanied  by  an  increase  of  from  seventy  to  one 
hundred  per  cent  in  wages,  with  a  considerable  reduction  in 
the  hours  of  labor.*  M.  Poulin,  a  leading  French  manufact- 
urer at  Rheims,  has  recently  stated  that  the  results  of  in- 
vestigations in  France  show  that  during  this  century  the 
progress  of  wages  and  machinery  has  been  similar — the 
wages  in  French  wool-manufactories,  which  were  one  franc 
and  a  half  per  day  in  1816,  being  (in  1883)  five  francs ; 
while  the  cost  of  weaving  a  meter  of  merino  cloth,  which 
was  then  sixteen  francs,  is  now  I/.  45c.  "  In  Nottingham," 
says  Mr.  Edwin  Chadwick,  the  distinguished  English  econo- 
mist,! "  the  introduction  of  more  complex  and  more  costly 
machinery  for  the  manufacture  of  lace,  while  economizing 
labor,  augmented  wages  to  the  extent  of  over  one  hundred 
per  cent.  I  asked  a  manufacturer  of  lace  whether  the  large 
machine  could  not  be  worked  at  the  common  lower  wages 
by  any  of  the  workers  of  the  old  machine.  '  Yes,  it  might,' 
was  the  answer, '  but  the  capital  invested  in  the  new  ma- 
chinery is  very  large,  and  if  from  drunkenness  or  misconduct 

*  "  Report  on  the  Statistics  of  Wages,"  by  Joseph  D.  Weeks,  "  Tenth 
Census  of  the  United  States,"  vol.  xx. 

t "  Employers'  Liability  for  Accidents  to  Work-people,"  by  Edwin  Chad- 
wick. 


372  RECENT  ECONOMIC  CHANGES. 

anything  happened  to  the  machine,  the  consequences  would 
be  very  serious.'  Instead  of  taking  a  man  out  of  the  streets, 
as  might  be  done  with  the  low-priced  machine,  he  (the  em- 
ployer) found  it  necessary  to  go  abroad  and  look  for  one  of 
better  condition,  and  for  such  a  one  high  wages  must  be 
given."  All  factory  investigations  in  Great  Britain  further 
show  that  the  lowest  rates  of  wages,  as  a  rule,  are  paid  in 
establishments  using  old  and  imperfect  machinery,  where 
the  output  is  necessarily  comparatively  small  and  inferior. 

A  remarkable  exhibit  made  in  a  recent  report  of  the 
Illinois  Central  Kailroad,  showing  the  cost  of  the  locomotive 
service  for  each  year  for  the  past  thirty  years,  is  also  espe- 
cially worthy  of  attention  in  connection  with  this  subject. 
From  this  it  appears  that  the  cost  per  mile  run  has  fallen 
from  26-52  cents  in  1857  to  13-93  cents  in  1886 ;  a  reduction 
which  has  been  effected  wholly  by  inventions  and  improve- 
ments in  machinery.  But  a  further  point  of  greater  inter- 
est is,  that  during  this  same  period  the  wages  of  the  engi- 
neers and  firemen  have  risen  from  4-51  cents  to  5-52  cents 
per  mile  run ;  or,  in  other  words,  the  engineers  and  firemen 
on  the  Illinois  Central,  who  in  1857  received  seventeen  per 
cent  of  the  entire  cost  of  its  locomotive  service,  received  in 
1886  nearly  forty  per  cent  (39'6)  of  the  total  cost. 

A  comparison  of  the  accepted  statistics  of  the  cotton- 
manufacturing  industry  of  the  United  States  for  the  years 
1831  and  1880  warrants  conclusions  which  might  properly 
be  designated  as  extraordinary  if  they  were  at  all  excep- 
tional. Thus,  the  number  of  spindles  operated  by  each  la- 
borer was  nearly  three  times  greater  in  1880  than  in  1831 ; 
the  product  per  spindle  one  fourth  greater ;  the  product  per 
laborer  employed  nearly  four  times  as  great ;  the  price  of 
cotton  cloth  sixty  per  cent  less ;  wages  eighty  per  cent 
higher ;  and  the  consumption  of  cotton  cloth  per  capita  of 
the  population  over  one  hundred  per  cent  greater. 

The  introduction  of  machinery  in  many  branches  of  in- 
dustry— and  more  especially  in  agriculture — while  increas- 


SPECIAL  CHARACTERISTIC  OF  MACHINERY.       373 

ing,  perhaps,  the  monotony  of  employment,  has  also  greatly 
lightened  the  severity  of  toil,  and  in  not  a  few  instances  has 
done  away  with  certain  forms  of  labor  which  were  unques- 
tionably brutalizing  and  degrading,  or  physically  injurious.* 
In  fact,  one  of  the  special,  if  not  the  special  characteristic 
of  machinery  is,  that  it  always  saves  the  lowest  and  crudest 
forms  of  labor ;  and  every  invention  or  machine  which  re- 
leases manual  labor  from  inferior  kinds  of  work,  or  from 
occupations  which  can  be  better  supplied  by  a  machine,  is  a 
positive  gain  to  society. 

Another  paradox  which  should  not  be  overlooked  in  this 
discussion  is,  that  those  countries  in  which  labor-saving 
machinery  has  been  most  extensively  adopted,  and  where  it 
might  naturally  be  inferred  that  population  through  the 
displacement  and  economizing  of  labor  would  diminish,  or 
at  least  not  increase,  are  the  very  ones  in  which  population 
has  at  the  same  time  increased  most  rapidly.  On  the  other 
hand,  the  reports  of  U.  S.  Consul  Schoenhof  to  the  State 
Department  (1888)  show,  that  the  woolen  industry  of  Ire- 
land, which  by  reason  of  the  abundance  and  cheapness  of 
capable  labor-supply  ought  almost  to  defy  competition,  is 
most  unprosperous ;  and,  in  great  part,  through  want  of 
enterprise  in  the  use  of  machinery ;  few  mills  being  thor- 
oughly equipped  in  this  respect,  while  in  whole  districts  the 
weaving  of  woolen  cloth  is  yet  done  in  cabins  upon  hand- 
looms.  As  a  result,  the  number  of  people  employed  in  this 
industry  in  Ireland  is  comparatively  very  small,  and  at 
wages  only  sufficient  for  the  insuring  of  a  most  miserable 
subsistence. 

Taking  all  the  machinery-using  countries  into  account, 

*  Mowing,  reaping,  raking  machinery,  winnowing,  shelling,  and  weighing 
machines,  hay-tedders,  horse-forks,  wheel-harrows,  improved  plows,  better 
cultivators,  and  so  on  through  almost  the  entire  list  of  farm-tools,  have  com- 
bined to  make  the  change  in  farm-work  almost  a  revolution  ;  and  those  only 
who  have  spent  years  in  farming  by  old  methods  can  fully  realize  the  extent 
to  which  the  severity  of  toil  has  been  lightened  to  the  farmer  by  the  introduc- 
tion and  use  of  machinery. 
17 


374  RECENT  ECONOMIC  CHANGES. 

the  number  of  persons  who  have  been  displaced  during  re- 
cent years  by  new  and  more  effective  methods  of  production 
and  distribution,  and  have  thereby  been  deprived  of  occupa- 
tion and  have  suffered,  does  not  appear  to  have  been  so  great 
as  is  popularly  supposed ;  a  conclusion  that  finds  support  in 
the  fact  that,  notwithstanding  trade  generally  throughout 
the  world  has  been  notably  depressed  since  1873,  through  a 
continued  decline  in  prices,  reduction  of  profits,  and  depre- 
ciation of  property,  the  volume  of  trade — or  the  number  of 
things  produced,  moved,  sold,  and  consumed — on  which  the 
majority  of  those  who  are  the  recipients  of  wages  and  sala- 
ries depend  for  occupation,  has  all  this  time  continually  in- 
creased, and  in  the  aggregate  has  probably  been  little  if  any 
less  than  it  would  have  been  if  the  times  had  been  consid- 
ered prosperous.  In  the  United  States  there  is  little  evi- 
dence thus  far  that  labor  has  been  disturbed  or  depressed  to 
any  great  extent  from  this  cause.  But  there  is  undoubtedly 
a  feeling  of  apprehension  among  the  masses  that  the  oppor- 
tunities for  employment  through  various  causes — continued 
large  immigration,  absorption  of  the  public  lands,  as  well  as 
machinery  improvements — are  less  favorable  than  formerly, 
and  tend  to  be  still  further  restricted ;  and  this  apprehen- 
sion finds  expression  in  opposition  to  Chinese  immigration, 
to  the  importation  of  foreign  labor  on  contract,  to  the  in- 
crease in  the  number  of  apprentices,  and  in  the  endeavor  to 
restrict  the  participation  in  various  employments  to  mem- 
bership of  certain  societies.  The  reports  from  many  of  the 
large  industrial  centers  of  the  United  States  during  the  year 
1887  were  to  the  effect  that,  while  specific  results  are  now 
attained  at  much  less  cost  and  with  the  employment  of 
much  less  labor,  the  increased  demand,  owing  to  a  reduction 
in  the  price  and  improvement  in  the  quality  of  the  articles 
manufactured  under  the  new  conditions,  has  operated  not 
merely  to  prevent  any  material  reduction  in  the  rates  of 
wages,  or  in  the  number  of  employes,  but  to  largely  increase 
both  rates  and  numbers.  The  annual  investigation  made 


CONDITIONS  FOR  EMPLOYMENT.  375 

by  the  managers  of  "  Bradstreet's  Journal "  into  the  con- 
dition of  the  industries  of  the  country  for  1887,  indicated 
that  in  March  of  that  year  400,000  more  industrial  employes 
were  at  work  than  in  1885.  In  thirty-three  cities  the  num- 
ber of  employes  at  work  was  992,000  by  the  census  of  1880, 
1,146,000  in  January,  1885,  and  1,450,000  in  March,  1887. 
The  change  in  the  average  wages  received  between  1885-'87 
as  compared  with  1882-'85,  shows  a  very  general  increase : 
from  ten  to  fifteen  per  cent  in  woolen  goods  and  clothing ; 
fifteen  in  cotton  goods,  silk  goods,  and  iron-mills ;  twelve 
per  cent  in  the  wages  of  three  fourths  of  the  employes  of 
beef-  and  pork-packing  establishments ;  twenty  per  cent  in 
anthracite-coal  mining,  and  the  like.  In  the  case  of  the 
boot  and  shoe  industry,  an  opinion  expressed  by  those  com- 
petent to  judge  is,  that  while  "  there  has  been  a  reduction 
in  cost  and  in  the  number  of  employes  per  one  hundred 
cases  produced  of  from  fifteen  to  twenty  per  cent,  the  actual 
number  of  persons  employed  has  been  increased ;  and  in 
cases  where  the  wages  of  old  classes  of  workmen  are  affected 
they  have  been  raised." 

In  the  United  States,  notwithstanding  the  large  sup- 
plementation in  recent  years  of  manual  labor  engaged 
in  agriculture  by  machinery,  and  the  further  fact  that 
certain  branches  of  agriculture  have  been  regarded  as  un- 
profitable, no  large  number  of  agricultural  laborers  have 
been  reported  as  unemployed ;  the  continually  increasing 
diversity  of  occupations  concurrently  opening  up  to  them, 
in  common  with  all  laborers,  new  avenues  for  employ- 
ment. 

On  the  Continent  of  Europe,  the  grievances  of  labor, 
attributable  to  new  conditions  of  production  and  distribution, 
seem  to  be  mainly  confined  to  the  agriculturists  and  to  those 
bred  to  handicraft  employments;  and  for  both  of  these 
classes  the  outlook  is  not  promising. 

In  Great  Britain  the  number  of  persons  who  are  in  want, 
for  lack  of  employment,  appears  to  have  largely  increased 


376  RECENT  ECONOMIC  CHANGES. 

in  recent  years.*  But  as  there  has  been  no  cessation  in  the 
growth  of  the  mechanical  industries  of  the  United  King- 
dom, or  in  her  transportation  service  by  land  or  sea,  or  in 
her  production  of  coal  and  iron,  or  in  the  consumption  of 
her  staple  food  commodities — such  growth,  although  not 
increasing  as  it  were  by  "  leaps  and  bounds,"  as  in  some 
former  periods  (as  during  the  decade  from  1865  to  1875), 
being  always  in  a  greater  ratio  than  her  increase  in  popula- 
tion, f  it  would  seem  that  any  increase  in  the  number  of  her 
necessarily  unemployed  must  have  been  mainly  derived  from 
the  one  branch  of  her  industry  that  has  not  been  prosperous, 
namely,  agriculture,  in  which  the  losses  in  recent  years  on 
the  part  alike  of  landlords,  tenants,  and  farm-laborers,  from 
decline  in  land  and  rental  values,  in  the  prices  of  farm  prod- 
ucts, and  through  reduction  of  wages,  has  been  very  great.  J 

*  "  The  one  thing  which  I,  and  those  associated  with  me,  always  at  once 
peremptorily  refuse  to  do,"  said  recently  an  English  (London)  clergyman 
whose  life  is  among  the  poor,  "  is  to  try  and  get  men,  women,  and  children 
work  to  do.  I  say  at  once :  '  That  is  impossible.  To  get  you  work  would  he 
to  deprive  some  other  one  of  work,  and  that  I  can  not  do,'  "  the  meaning  ot 
which  was  that  every  occupation  in  London,  in  the  opinion  of  the  speaker, 
was  full. 

t  The  ratio  of  increase  in  the  population  of  the  United  Kingdom  between 
1875  and  1885  was  about  ten  per  cent.  During  the  same  period  the  increase 
in  the  production  of  coal  was  twenty  per  cent;  in  pig-iron,  sixteen  per  cent ; 
in  railway  receipts  from  goods-traffic  per  head  of  population,  eighteen  per 
cent ;  in  shipping  engaged  in  foreign  trade,  thirty-three  per  cent ;  in  con- 
sumption of  tea  per  head,  thirteen  and  a  half  per  cent ;  in  sugar  per  head, 
nineteen  per  cent. 

J  "  The  agricultural  returns  for  Great  Britain  tell  us  that,  from  1873  to 
1884,  the  quantity  of  arable  land  in  the  country  has  decreased  considerably 
more  than  a  million  acres.  The  reason  of  this  is  chiefly  that  landlords  hav- 
ing farms  thrown  on  their  hands,  and  being  unable  to  obtain  fresh  tenants, 
find  it  the  most  economical  method  to  lay  down  the  land  in  permanent  past- 
ure, which  requires  the  minimum  of  labor,  superintendence,  and  expenditure 
to  work.  This  in  part  explains  the  forced  exodus  of  the  agricultural  laborers 
no  longer  required  to  cultivate  the  land  thus  laid  down.  About  twenty-five 
laborers  are  required  on  an  arable  farm  of  one  thousand  acres,  while  probably 
five  would  be  ample  on  the  same  quantity  of  pasture  ;  and  we  should  have  a 
diminution  of  twenty  thousand  laborers  from  the  change  of  cultivation  which 
has  taken  place,  or,  with  their  families,  a  population  of  sixty  or  eighty  thou- 


DISCONTENT  OF  IRELAND. 

Mr.  Alfred  Eussel  Wallace  inclines  to  the  opinion  that 
twenty  thousand  English  farm-laborers,  involving,  with  their 
families,  a  population  of  from  sixty  to  eighty  thousand, 
were,  between  1873  and  1887,  obliged  to  quit  their  homes, 
and  mostly  drifted  to  the  larger  cities,  in  consequence  merely 
of  substituting,  through  the  increasing  unprofitableness  of 
grain-culture,  pasture  for  arable  land. 

We  have  in  these  facts,  furthermore,  a  clew  to  the  cause 
of  the  increased  discontent  in  recent  years  in  Ireland.  If 
the  Irish  tenantry  could  pay  the  rent  demanded  by  the  land- 
lords, and  at  the  same  time  achieve  for  themselves  a  com- 
fortable subsistence,  there  would  be  no  necessity  for  extraor- 
dinary governmental  interference  on  their  behalf  ;  and  this 
was  what,  prior  to  the  years  1873-'75,  the  prices  of  farm 
products — especially  of  all  dairy  products — enabled  the  bet- 
ter class  of  Irish  tenants  to  achieve.  But,  since  then,  the 
fall  of  prices  has  entirely  changed  the  condition  of  affairs, 
and  made  a  reduction  and  perhaps  an  entire  abolition  of  the 
rents  of  arable  land  in  Ireland  an  essential,  if  the  Irish  ten- 
ant is  to  receive  anything  in  return  for  his  labor.  A  French 
economist — M.  de  Grancey — who  has  recently  published  the 
results  of  a  study  of  Ireland,  founded  on  a  personal  investi- 
gation of  the  country,  is  of  the  opinion  that,  although  the 
population  of  the  island  has  been  reduced  by  emigration 
from  8,025,000  in  1847  to  4,852,000  in  1887,  it  is  not  now  ca- 
pable of  supporting  in  decency  and  comfort  more  than  from 
two  to  three  million  inhabitants.  The  same  authority  tells 
us  that  agricultural  distress,  occasioned  by  the  same  agen- 
cies, exists  to-day  in  France  in  as  great  a  degree  as  in  Great 
Britain.  The  peasant  proprietors  have  ceased  to  buy  land 
and  are  anxious  to  sell  it ;  and  in  the  department  of  Aisne, 

Band,  which,  from  this  cause  alone,  have  been  obliged  to  quit  their  homes,  and 
have  mostly  drifted  hopelessly  to  the  great  towns."  In  addition,  a  large 
number  of  farms  "  are  now^and  have  been  for  some  years,  lying  absolutely 
waste  and  uncultivated."—"  Bad  Times,"  ALFBKD  RUSSKL  WALLACE,  Lon- 
don, 1885. 


378  RECENT  ECONOMIC  CHANGES. 

one  of  the  richest  in  France,  one  tenth  of  the  land  is  aban- 
doned, because  it  is  found  that,  at  present  prices,  the  sale  of 
produce  does  not  cover  the  expenses  of  cultivation.* 

Now,  if  it  were  desirable  to  search  out  and  determine 
the  primary  responsibility  for  the  recent  large  increase  in 
the  number  of  the  English  unemployed,  or  for  the  distress 
and  revolt  of  the  Irish  tenantry,  or  the  growing  impoverish- 
ment of  the  French  and  German  peasant  proprietors,  it 
would  be  found  that  it  was  not  so  much  the  land  and  rent 
policy  of  these  different  countries  that  should  be  called  to 
account,  as  the  farmers  on  the  cheap  and  fertile  lands  of  the 
American  Northwest,  the  inventors  of  their  cost-reducing 
agricultural  machinery,  of  the  steel  rail,  and  of  the  com- 
pound marine  engine,  which,  collectively,  have  made  it  both 
possible  and  profitable  "  to  send  the  produce  of  five  acres  of 
wheat  from  Chicago  to  Liverpool  for  less  than  the  cost  of 
manuring  one  acre  in  England."  France,  in  addition,  might 
regard  as  a  special  grievance  the  invention  of  analine  dyes, 
which  have  abolished  the  cultivation  of  madder,  and  deprived 
whole  districts  in  the  valley  of  the  Ehone  of  what  was  for- 
merly a  most  profitable  agricultural  industry.  But,  looking 
into  this  matter  from  a  cosmopolitan  point  of  view,  and 
balancing  the  aggregate  of  good  and  bad  results,  how  small 
are  the  evils  which  have  been  entailed  upon  the  agricul- 
tural laborers  in  England,  Ireland,  France,  or  elsewhere, 
in  consequence  of  changes  in  the  condition  of  their  labor, 
in  comparison  with  the  almost  incalculable  benefits  that 
have  come,  in  recent  years,  to  the  masses  of  all  civil- 
ized countries,  through  the  increased  abundance  and  cheap- 

*  M.  de  Grancey  is  of  the  opinion  that  one  of  the  most  fertile  sources  of 
Irish  misery  and  degradation  is  the  unauthorized  and  illegal  subletting  of 
farms.  He  states  that  he  met  with  cases  where  from  forty-five  to  fifty  per- 
sons lived  in  a  state  of  setni-starvation  on  a  farm  calculated  to  yield  a  com- 
fortable subsistence  to  a  family  of  five  or  six.  In  each  generation,  the  fartn, 
in  despite  of  special  prohibitory  clauses  in  the  lease,  is  divided  among  the 
sons.  "Where  there  are  no  sons,  subtenants  are  found  willing  to  take  small 
parcels  of  land  at  the  most  exorbitant,  prices. 


WONDERFUL   ECONOMIC  PHENOMENA.  379 

ness  of  food,  and  a  consequent  increase  in  their  comfort  and 
vitality ! 

Another  matter  vital  to  this  discussion  may  here  and 
next  be  properly  taken  into  consideration.  As  the  evidence 
is  conclusive  that  the  direct  effect  of  material  progress  is  to 
greatly  increase  and  cheapen  production  and  to  economize 
labor ;  and  as  there  is  no  reason  to  suppose  that  the  maxi- 
mum of  progress  in  this  direction  has  been  attained,  and 
every  reason  to  expect  that  the  future  will  be  characterized 
by  like  and  even  greater  results  progressively  occurring,  the 
question  arises,  Is  labor  to  be  continually,  and  in  a  degree 
ultimately,  displaced  from  occupation  by  progressive  econ- 
omy of  production  ?  Is  continual  and  fiercer  competition 
to  effect  sales,  both  of  product  and  labor,  in  excess  of  cur- 
rent demands,  likely  to  produce  continued  disturbance  and 
unhealthy  fall  of  prices,  extensive  reductions  in  wages,  and 
the  more  extensive  employment  of  the  cheaper  labor  of 
Women  and  children  ?  Is  society  working  through  all  this 
movement  toward  what  has  been  called  an  "  anarchy  of  pro- 
duction"? 

Experience  thus  far,  under  what  may  be  termed  the  new 
regime  of  production  and  distribution,  does  not,  however, 
fairly  warrant  any  such  anticipations.  Wages,  speaking 
generally,  have  not  fallen,  but  have  increased  ;  and,  except 
in  Germany,  there  is  little  indication  of  a  tendency  to  in- 
crease the  hours  of  labor,  or  encroach  upon  the  reservation 
of  Sunday.  Everywhere  else,  even  in  Kussia,  the  tendency 
is  in  the  opposite  direction. 

The  extent  and  rapidity  of  the  increase  in  the  consump- 
tion of  all  useful  and  desirable  commodities  and  services 
which  follows  every  increase  in  the  ability  of  the  masses  to 
consume,  is  one  of  the  most  wonderful  of  modern  economic 
phenomena ;  and  the  one  thing  which,  more  than  any  other, 
augments  their  ability  to  consume,  is  the  reduction  in  the 
price  of  commodities,  or  rather  the  reduction  in  the  amount 
of  human  effort  or  toil  requisite  to  obtain  them,  which  the 


380  RECENT  ECONOMIC  CHANGES. 

recent  improvements  in  the  work  of  production  and  distri- 
bution have  effected.  Better  living,  contingent  on  a  reduc- 
tion of  effort  necessary  to  insure  a  comfortable  subsistence, 
induces  familiarity  with  better  things ;  constitutes  the  surest 
foundation  for  the  elevation  of  the  standard  of  popular  in- 
telligence and  culture,  and  creates  an  increasing  desire  for 
not  only  more,  but  for  a  higher  grade,  of  commodities  and 
services.  There  are,  therefore,  two  lines  upon  which  the 
consumption  of  the  products  of  labor  is  advancing :  the 
one,  in  which  the  stimulant  is  animal  in  its  nature,  and  de- 
mands food,  clothing,  shelter,  and  fuel,  for  its  satisfaction; 
and  the  other  intellectual,  which  will  only  be  satisfied  by  an 
increased  supply  of  those  things  which  will  minister  to  a 
higher  standard  of  comfort  and  education.  Thus  far  the 
world's  manual  laborers  have  not  kept  up  in  culture  with 
the  improved  and  quickened  methods  of  production ;  and 
therefore  in  certain  departments  there  is  not  yet  that  op- 
portunity for  work  that  there  undoubtedly  will  be  in  the 
future. 

"  There  is  no  good  reason  why  a  workingman  earning 
one  thousand  or  fifteen  hundred  dollars  a  year,  as  many  do, 
should  not  desire  as  many  comforts  in  the  shape  of  furni- 
ture, books,  clothing,  pictures,  and  the  like  for  himself  and 
his  family,  and  desire  them  as  intelligently,  as  the  minister, 
or  lawyer,  or  doctor,  who  is  earning  a  similar  amount." 

But  as  abstract  conclusions  in  economic  as  well  as  in 
all  other  matters  are  best  substantiated  and  comprehended 
through  practical  examples,  to  examples  let  us  turn.  And 
first  as  to  certain  notable  instances  derived  from  recent  ex- 
periences, showing  how  remarkably  and  rapidly  increase  of 
consumption  has  followed  reduction  of  prices,  even  in  cases 
where  the  reduction  has  been  comparatively  slight,  and  a 
marked  increase  of  consumption  could  not  have  been  rea- 
sonably anticipated. 

Among  the  staple  food  articles  that  have  greatly  declined 
in  price  during  recent  years  is  sugar,  and  this  decline  has 


RELATION  OF  CONSUMPTION  TO  PRICE.         381 

been  attended  with  a  large  increase  in  consumption;  the 
decline  in  the  average  price  of  fair  refining  sugar  in  the 
United  States  (in  bond)  having  been  from  4-75  cents  per 
pound  in  1882  to  2'92  cents  in  1886 ;  while  the  average  con- 
sumption per  capita,  which  was  thirty-nine  pounds  for  the 
five  years  from  1877  to  1882,  was  49-8  pounds  for  the  five 
years  from  1882  to  1887,  and  52-6  pounds  in  1888.  Com- 
paring 1885  with  1887,  the  consumption  of  sugar  in  the 
United  States  increased  over  eleven  per  cent,  or  largely  in 
excess  of  any  concurrent  growth  of  population.  Convert- 
ing, now,  so  much  of  this  larger  consumption  as  was  due  to 
diminished  price  (probably  more  than  one  hundred  million 
pounds)  into  terms  of  acres  and  labor  employed  in  its  pro- 
duction ;  into  the  ships  and  men  required  for  its  transpor- 
tation ;  into  the  products,  agricultural  and  manufactured, 
and  the  labor  they  represent,  that  were  given  in  exchange 
for  it,  and  we  can  form  some  idea  of  the  greater  opportuni- 
ties for  labor  through  larger  volume  of  exchanges,  and  the 
increased  comfort  for  those  who  labor,  that  follows  every 
reduction  in  the  cost  necessary  to  procure  desirable  things. 

In  1887,  with  an  import  price  of  about  sixteen  cents  per 
pound,  the  importation  of  coffee  into  the  United  States  was 
331,000,000  pounds.  In  1885,  with  an  average  import  price 
of  eight  cents,  the  importation  was  572,000,000  pounds. 
Between  1873  and  1885  the  coffee,  product  of  the  world  that 
went  to  market,  concurrently  with  this  large  decline  in  its 
price,  increased  to  the  extent  of  fifty-two  per  cent.  Subse- 
quent to  1885,  the  price  of  coffee,  by  reason  primarily  of  a 
deficient  crop  in  Brazil,  greatly  advanced,  and  consumption 
declined  in  the  year  1887  to  the  estimated  extent  of  a  mill- 
ion bags  for  Europe,  and  an  average  of  two  pounds  per  head 
in  the  United  States.  With  the  decline  in  the  volume  of 
exchanges  consequent  on  such  a  decline  in  the  production 
and  consumption  of  this  commodity,  the  opportunities  for 
the  employment  and  remuneration  of  labor  must  obviously 
also  have  been  correspondingly  restricted. 


382  RECENT  ECONOMIC  CHANGES. 

Previous  to  the  closing  months  of  the  year  1887,  there 
was  (as  has  been  before  shown)  a  great  reduction  in  the 
price  of  copper,  contingent  upon  an  increased  product  and 
a  surplus  offering  upon  the  world's  markets.  The  result 
was  such  a  general  extension  of  the  uses  of  this  metal  that 
the  United  States  Geological  Survey  estimated  that,  for  the 
year  1886,  the  increase  in  the  consumption  of  copper  by  the 
leading  American  manufactories  of  copper  and  brass  was  in 
excess  of  twenty-four  per  cent ;  and  that  a  very  nearly  equal 
increase  was  experienced  in  the  preceding  year  (1885) ;  all 
of  which  indicated  a  large  if  not  a  fully  proportional  in- 
crease for  the  periods  mentioned  in  the  opportunity  for  labor, 
at  comparatively  high  wages,  in  these  departments  of  in- 
dustry. On  the  other  hand,  with  a  large  advance  in  the 
price  of  copper  during  the  latter  months  of  1887,  the  opera- 
tions of  the  manufacturers  of  copper  and  brass  all  over  the 
world  were  very  greatly  restricted. 

Every  reduction  in  the  price  of  gas  has  been  attended 
with  greatly  increased  consumption,  entailing  greater  demand 
for  labor  in  the  mining  and  transporting  of  coal  and  other 
materials,  and  in  service  of  distribution ;  and  it  is  very 
doubtful  whether  the  apprehensions  of  impairment  of  the 
value  of  the  capital  of  the  gas  companies,  which  are  always 
excited  by  such  reductions,  are  ever,  to  any  disastrous  ex- 
tent, realized ;  while  it  is  the  general  experience  that  the 
profits  on  the  increased  demand  created  by  cheaper  supply 
continue  to  afford  to  the  gas  companies  reasonable  and  often 
equal  returns  on  their  invested  capital.  It  seems  to  be  also 
well  established  that  the  extensive  introduction  and  use  of 
the  electric  light  has  in  no  way  impaired  the  aggregate  con- 
sumption of  gas. 

In  1831  the  average  price  of  cotton  cloth  in  the  United 
States  was  about  seventeen  cents  per  yard ;  in  1880  it  was 
seven  cents.  This  reduction  of  price  has  been  accompanied 
by  an  increase  in  the  annual  per  capita  consumption  of  the 
people  from  5-90  pounds  of  cloth  to  13'91  pounds;  which  in 


ILLUSTRATIONS  OP  INCREASED  CONSUMPTION.   383 

turn  represents  a  great  increase  in  all  the  occupations  con- 
nected with  cotton,  from  its  growth  to  its  transformation 
into  cloth  and  cloth  fabrications ;  and  the  evidence  is  con- 
clusive that  in  all  these  occupations  the  share  of  labor  in  the 
progressing  augmentations  of  values  and  quantities  has  con- 
tinually increased ;  the  advance  in  the  wages  of  the  cotton- 
mill  operatives,  during  the  period  under  consideration,  hav- 
ing been  fully  eighty  per  cent. 

When,  through  competition,  the  companies  controlling 
the  submarine  telegraph  lines  between  the  United  States 
and  Europe  reduced  in  1886  their  rates  from  forty  to  twelve 
cents  per  word,  two  hundred  and  twelve  words,  it  was  re- 
ported, were  regularly  transmitted  in  place  of  every  one 
hundred  previously  sent.  Assuming  this  report  to  be  cor- 
rect, a  comparison  of  receipts  under  the  new  and  old  rates 
would  give  the  following  results:  Two  hundred  and  ten 
words  at  twelve  cents  each,  $25.20 ;  one  hundred  words  at 
forty  cents  each,  $40 ;  or  a  reduction  in  rates  of  seventy  per 
cent  impaired  the  revenues  of  the  lines  to  an  extent  of  only 
thirty-seven  per  cent. 

A  reduction  in  1886  in  the  postal  system  of  the  United 
States  of  three  cents  in  the  fee  for  domestic  money-orders 
not  exceeding  $5  (or  from  eight  to  five  cents)  has  operated 
to  increase  the  use  of  this  service  to  the  remitters  of  small 
sums  in  a  very  noticeable  degree,  the  average  amount  of 
each  order  issued  in  1887  being  but  $12.72  as  against  an 
average  of  $14.33  in  1866,  and  larger  sums  in  previous 
years;  while  the  increase  in  the  number  of  money-orders 
issued  in  1887  was  16-27  per  cent  greater  than  in  1886. 

The  following  have  been  the  economic  changes  within  a 
decade  in  the  business  of  manufacturing  American  watches, 
and  the  manner  in  which  such  changes  have  affected  the 
welfare  alike  of  owners  and  employes :  "  A  great  reduction 
in  price  from  which  there  has  been  no  recovery.  Business 
has  invariably,  and  with  scarcely  notable  friction,  adjusted 
itself  to  new  conditions ;  and  save  only  in  exceptional  cases 


384:  RECENT  ECONOMIC  CHANGES. 

— new  companies  struggling  for  a  place — the  capital  in- 
vested has  been  fairly  remunerative.  Best  of  all,  the  wages 
of  operatives  have  been  maintained ;  for  one  reason  among 
others,  that  reductions  in  rates  paid  for  piece-work  have 
operated  to  stimulate  the  intelligence  of  the  workman,  so 
that  he  devises  for  his  special  works  methods  and  appliances 
which  not  only  increase  his  speed  but  his  product  also,  and 
improve  its  quality.  The  great  decline  in  recent  years  in 
the  price  of  American  watches  has  not  been  caused  by  the 
importation  of  foreign  watches,  but  has  sprung  wholly  out 
of  an  intense  competition  between  American  manufacturers ; 
and  from  this  and  other  causes  the  industry  has  experienced 
all  the  vicissitudes  incident  to  the  occurrence  of  what  are 
generally  denominated  '  hard  times.' " 

The  following  examples  of  the  increase  in  the  consump- 
tion of  commodities,  consequent  on  reductions  of  price 
through  abatements  of  taxation,  also  indicate  how  largely 
the  opportunities  for  labor  and  of  the  sphere  of  exchanges 
or  business  can  be  increased  in  the  future  by  an  extension 
of  this  policy : 

Eeductions  in  the  price  of  tea  in  Great  Britain,  following 
a  progressive  reduction  in  the  duties  on  the  imports  of  this 
commodity,  from  2s.  2$d.  in  1852  to  6d.  (the  present  rate), 
have  been  accompanied  by  an  increase  in  its  annual  con- 
sumption from  58,000,000  pounds  in  1851  to  183,000,000 
pounds  in  1886,  or  from  1-9  pound  per  head  of  the  popula- 
tion to  five  pounds. 

A  removal  in  1883  of  the  comparatively  small  tax  of  one 
cent  on  every  hundred  matches  imposed  by  the  United 
States,  is  reported  to  have  reduced  the  price  about  one  half, 
and  to  have  increased  the  domestic  consumption  to  the 
extent  of  nearly  one  third. 

In  1883  a  few  additions  were  made  to  the  free  list  under 
the  tariff  of  the  United  States,  and  among  them  were  in- 
cluded unground  spices,  which  had  been  previously  subjected 
to  duties,  which,  although  heavy  as  ad  valorem^  were  in 


ECONOMIC  EXPERIENCE  OF  THE  BOOOKLYN  BRIDGE.  385 

themselves  so  small  specifically  (as  five  cents  per  pound  each 
on  pepper,  cloves,  and  pimento)  that  their  influence  on  the 
consumption  of  the  American  people,  with  their  acknowl- 
edged tendency  to  extravagance,  would  not  have  been  gen- 
erally regarded  as  likely  to  be  considerable;  and  yet  the 
removal  of  the  duties  on  these  commodities,  which  pass 
almost  directly  into  consumption,  carried  up  their  importa- 
tions in  the  following  remarkable  manner :  In  the  case  of 
pepper,  from  6,973,000  pounds  in  1883  to  12,712,000  pounds 
in  1888;  pimento,  from  1,283,000  pounds  to  2,000,000 
pounds ;  cassia-buds,  from  27,739  pounds  to  248,000  pounds; 
cloves,  from  989,000  pounds  to  1,854,000  pounds ;  nutmegs, 
from  661,132  to  1,246,806  pounds;  while  the  importation 
and  consumption  of  mace  in  the  country  more  than  doubled 
and  that  of  cayenne  pepper  more  than  trebled  during  the 
same  period.  It  is  evident,  therefore,  that  the  masses  of  the 
United  States  during  the  continuance  of  these  taxes  did  not 
have  all  the  spices  they  would  like,  to  make  their  food  more 
palatable  and  savory ;  that  trade  between  the  spice-produc- 
ing countries  and  the  United  States  was  restricted ;  and,  as 
all  trade  is  essentially  an  exchange  of  product  for  product, 
that  the  labor  of  the  United  States  gained  under  the  new 
conditions,  either  by  sharing  in  the  greater  abundance  of 
useful  things,  or  through  an  increased  opportunity  for  labor 
in  producing  the  increase  of  commodities  that  the  increase 
of  exchanges  demanded. 

The  original  cost  of  the  suspension-bridge  between  the 
cities  of  New  York  and  Brooklyn  was  $15,000,000,  entailing 
an  annual  burden  of  interest  at  five  per  cent  of  $750,000. 
When  first  opened  to  public  use  in  September,  1883,  the 
rates  of  fare  were  fixed  at  five  cents  per  ticket  for  the  cars, 
and  one  cent  per  ticket  for  foot-passengers,  no  ticket  being 
sold  at  any  less  price  by  packages.  The  total  receipts  for 
the  first  year  (1883-'84)  from  all  traffic  sources  were  $402,- 
938,  and  the  total  number  of  car  and  foot  passenger  was 
11,503,440 ;  5,324,140  of  the  former  and  6,179,300  of  the 


386  RECENT  ECONOMIC  CHANGES. 

latter.  The  results  of  the  first  year's  operations  were  not, 
therefore,  encouraging  as  to  the  ability  of  the  bridge  to  earn 
the  interest  on  the  cost  of  its  construction.  During  the 
second  year  (1884-'85),  the  rates  of  fare  remaining  the  same, 
the  increase  in  the  aggregate  number  of  passengers  was  com- 
paratively small,  or  from  11,503,440  to  14,051,630 ;  but  in 
February,  1885,  the  rates  of  fare  were  greatly  reduced — i.  e., 
tickets  for  the  cars  (when  sold  in  packages  of  ten)  from  five 
cents  to  two  and  a  half,  and  tickets  for  promenade  (when 
bought  in  packages  of  twenty-five)  from  one  cent  to  one 
fifth  of  a  cent.  The  results  of  this  reduction  immediately 
showed  themselves  in  a  remarkable  increase  for  the  year  of 
seventy-one  per  cent  in  the  number  of  car  and  foot  passen- 
gers, or  from  an  aggregate  of  14,051,630  in  1884-'85  to 
25,082,587  in  1885-'86,  and  this  aggregate  has  gone  on 
increasing  to  33,116,810  for  the  year  ending  December  1, 
1887.  Concurrently  also  the  bridge  receipts  from  traffic 
tolls  have  increased  from  $565,544.45  in  1884-'85  (the  last 
year  of  high  fares)  to  $917,961  for  the  year  ending  Decem- 
ber 1,  1888,  with  a  net  profit  on  the  operations  of  the  year 
sufficient  to  pay  two  thirds  of  the  interest  on  the  original 
investment ;  or,  the  result  of  the  bridge  operations  since  the 
reductions  of  the  rates  for  its  use  has  been  accompanied  by 
an  increased  passenger  movement — car  and  foot — of  one 
hundred  and  thirty-five  per  cent,  and  a  gain  in  receipts  of 
sixty-two  per  cent. 

A  further  analysis  of  the  experiences  of  the  New  York 
and  Brooklyn  Bridge  since  its  construction  also  reveals  some 
curious  tendencies  of  the  American  people  in  respect  to 
consumption  and  expenditures.  During  the  first  year  the 
bridge  was  open  to  the  public,  the  number  of  foot-passengers 
paying  one  cent  was  6,179,300,  and  the  number  of  car-pas- 
sengers paying  five  cents  was  5,324,140.  The  next  year, 
fares  remaining  unchanged,  the  number  of  foot-passengers 
declined  to  3,679,733,  and  the  number  of  car-passengers  in- 
creased to  11,951,630.  In  the  third  year,  with  a  reduction 


ECONOMIC  PECULIARITIES.  387 

of  foot-fares  to  one  fifth  of  a  cent,  the  number  of  foot-pas- 
sengers declined  440,395,  or  to  an  aggregate  of  3,239,337 ; 
while  the  number  of  car-passengers  (with  a  reduction  of 
fare  from  five  to  two  and  a  half  cents)  increased  10,130,957, 
or  to  21,843,250.  For  the  year  ending  December  1,  1887, 
the  number  of  foot-passengers  further  declined  574,929,  or 
to  2,664,413,  while  the  number  of  car-passengers  further  in- 
creased 8,097,063,  or  to  27,940,313 ;  or  to  a  total  aggregate  of 
30,604,313.  In  the  year  ending  December  1,  1888,  the  num- 
ber of  foot-passengers  increased  121,125,  while  the  increase 
in  the  number  of  car-passengers  was  2,390,970,  making  the 
total  of  the  latter  30,331,000.  A  correct  explanation  of  these 
curious  results  may  not  be  possible,  but  one  inference  from 
them  that  would  seem  to  be  warranted  is,  that  when  the 
American  people  find  their  pecuniary  ability  is  abundantly 
sufficient  to  enable  them  to  satisfy  their  desire  for  certain 
commodities  or  services,  they  will  disdain  to  economize ;  and 
this  idea  may  find  illustration  and  confirmation  in  another  in- 
cident of  recent  American  experience.  Thus,  when  the  great 
decline  in  the  price  of  sugars  occurred  in  1883,  the  American 
refiners  expected  that,  whatever  of  increase  of  consumption 
might  be  attendant,  would  occur  mainly  in  the  lower  grades 
of  sugar;  but,  to  their  surprise,  the  actual  increase  was 
largely  in  respect  to  the  higher  grades.  A  leading  refiner, 
who,  somewhat  puzzled  at  this  result,  asked  one  of  his  work- 
men for  an  explanation  of  it,  received  the  following  answer : 
"I  give  my  wife  fifty  cents  every  Monday  morning  with 
which  to  buy  sugar  for  the  week  for  my  family,  and,  as  she 
finds  that  fifty  cents  will  now  buy  as  many  pounds  of  the 
white  as  we  once  could  get  of  the  yellow  sugars,  she  buys 
the  white."  A  European  workman  (certainly  a  Frenchman) 
would  probably  have  acted  differently.  He  would  have  tak- 
en the  same  grade  as  before  and  got  two  pounds  of  addition- 
al sweetening  for  his  money ;  or,  more  likely,  he  would  have 
bought  the  same  quantity  and  quality  as  before,  and  saved 
up  the  measure  of  the  decline  of  price  in  the  form  of  money. 


388  RECENT  ECONOMIC  CHANGES. 

Another  explanation  of  the  bridge  phenomenon  may 
be  that  the  average  American,  who  is  always  in  a  hurry, 
may  think  that,  with  the  privilege  of  riding  for  two  and 
a  half  cents,  he  can  not  afford  the  time  to  avail  himself 
of  the  privilege  of  walking  for  a  payment  of  one  fifth  of  a 
cent. 

Mr.  Robert  Giffen,  in  a  review  of  the  "  Eecent  Rate  of 
Material  Progress  in  England  "  (British  Association,  1887), 
recognizes  an  evident  tendency,  as  that  country  increases  in 
wealth,  for  the  numbers  employed  in  miscellaneous  indus- 
tries, and  in  what  may  be  called  "  incorporeal  functions  " — 
that  is,  as  artists,  teachers,  and  others,  who  minister  to  taste 
and  comfort  in  a  way  that  can  hardly  be  called  material — to 
increase  disproportionately  to  those  engaged  in  the  produc- 
tion of  the  great  staples  ;  and  that,  therefore,  the  production 
of  these  latter  is  not  likely  to  increase  as  rapidly  as  hereto- 
fore. All  of  which  is  equivalent  to  affirming  that,  in  virtue 
of  natural  law,  the  evils  resulting  from  the  displacement  of 
labor,  through  more  economic  methods  of  production  by 
machinery,  are  being  gradually  and  to  a  large  extent  counter- 
acted. No  one  can  doubt  that  this  is  the  tendency  in  the 
United  States  equally  as  in  England,  and  it  finds  one  strik- 
ing illustration  in  the  large  number  of  new  products  that 
are  demanded,  and  in  the  number  of  occupations  that  have 
been  greatly  enlarged  or  absolutely  created  in  recent  years, 
in  consequence  of  the  change  in  popular  taste,  conjoined 
with  popular  ability,  to  incur  greater  expense.  Especially 
is  this  true  in  respect  to  house-building  and  house-decora- 
tion. Ten  or  fifteen  years  ago  the  amount  of  fine  outside 
work  in  building  constructions — in  brick,  terra-cotta,  stone, 
and  metal — and  on  interiors,  in  the  way  of  painting,  paper- 
hangings,  wall-coverings  with  other  materials,  fine  wood- 
work, carving,  furniture-making,  carpet-weaving,  draperies 
for  doors  and  windows,  stained  glass  and  mirrors,  and  im- 
proved and  elaborate  sanitary  heating  and  ventilating  appa- 
ratus, was  but  a  very  small  fraction  of  what  is  now  required. 


POSTAL  STATISTICS.  389 

A  few  years  ago  plain  buttons,  both  as  respects  form  and 
color,  represented  the  bulk  of  the  demand  on  the  part  of  the 
public.  Gradually,  however,  the  old  style  of  these  goods 
failed  to  suit  the  tastes  of  the  multitude  and  the  require- 
ments of  fashion ;  and  the  button-manufacturers  now  re- 
port that  four  times  as  many  buttons — differing  widely  in 
form,  material,  color,  ornamentation,  and  cost — are  manu- 
factured and  sold  than  the  market  ten  years  ago  demanded. 
Nothing,  furthermore,  is  more  certain  than  that  all  these 
new  departments  of  industry  are  to  continue  progressively 
enlarging;  for  all  achievements  in  this  direction  increase 
taste  and  culture,  and  these  in  turn  create  new  and  enlarged 
spheres  for  industrial  occupation. 

How  these  same  influences  exert  themselves  for  the  ex- 
tension of  the  intercommunication  of  intelligence,  with  the 
attendant  increased  demand  for  service  and  materials  which 
represent  opportunities  for  labor,  is  exemplified  in  the  fol- 
lowing postal  statistics,  the  result  of  recent  German  investi- 
gation :  Thus,  for  the  year  1865  it  is  estimated  that  the  in- 
habitants of  the  world  exchanged  about  2,300,000,000  letters ; 
in  1873,  the  aggregate  was  3,300,000,000 ;  in  1885,  includ- 
ing postal-cards,  it  was  6,257,000,000 ;  in  1886,  6,926,000,000, 
with  a  larger  ratio  of  increase  in  the  transmission  of  printed 
matter,  patterns,  and  other  articles ;  the  whole  business  giv- 
ing employment  to  about  500,000  persons,  for  more  than 
one  half  of  which  number  there  was  probably  no  require- 
ment for  service  under  conditions  existing  in  1873.  And 
to  this  aggregate  should  be  added  the  increased  number  re- 
quired to  meet  the  greater  requirements  for  the  machinery 
and  service  of  larger  transportation,  and  vastly  larger  con- 
sumption of  all  the  material  and  service  incident  to  corre- 
spondence. The  experience  of  the  postal  service  of  the 
United  States  also  shows  that,  at  all  those  points  where  a 
free  delivery  of  letters  has  been  established,  the  postal  reve- 
nues have  quickly  and  greatly  augmented — another  illustra- 
tion that  every  increased  and  cheapened  facility  for  con- 


390  .        RECENT  ECONOMIC  CHANGES. 

sumption  brings  with  it  greater  demands  for  service  or 
production. 

A  comparatively  few  years  ago  the  highly  specialized 
profession  of  journalism  did  not  exist  at  all,  even  in  its  sim- 
plest form ;  and,  even  more  recently,  the  specialties  of  mak- 
ing and  attending  to  telephones  have  come  into  existence 
without  anything  in  the  nature  of  an  antecedent  foundation. 
In  fact,  no  small  proportion  of  the  many  new  applications 
of  science  that  are  constantly  made  have  in  view  the  creation 
of  new  wants,  rather  than  the  satisfying  of  old  ones. 

In  view,  then,  of  the  undoubted  tendency,  as  abundance 
or  wealth  increases,  for  labor  to  transfer  itself,  in  no  small 
proportions,  from  lower  to  higher  grades — from  the  produc- 
tion of  the  great  staples  to  occupations  that  minister  to 
comfort  and  culture,  rather  than  to  subsistence — how  im- 
politic, from  the  standpoint  of  labor's  interests,  seems  to  be 
the  imposition  of  high  taxes  (as  in  the  United  States)  on 
the  importation  of  works  of  art  of  a  high  character  and 
large  cost,  under  the  assumption  that  it  is  desirable  to  tax 
all  such  articles  as  luxuries,  and  that  it  is  for  the  interest  of 
the  masses  to  adopt  such  a  policy !  In  illustration,  let  us 
suppose  a  man  of  wealth  to  purchase  and  import  a  costly 
and  beautiful  art  product.  Having  obtained  it,  he  rarely 
finds  a  compensating  return  for  his  expenditure  in  an  exclu- 
sive and  selfish  inspection,  but  rather  in  exhibiting  it  to 
the  public ;  and  the  public  go  away  from  these  exhibitions 
with  such  higher  tastes  and  culture  as  impel  them  to  desire 
to  have  in  their  life-surroundings,  as  much  that  is  artistic  and 
beautiful — not  the  work  of  one,  but  of  many — as  their  means 
will  allow ;  even  if  it  be  no  more  than  a  cheerful  chromo- 
lithograph, a  photograph,  a  carpet  or  a  curtain  of  novel  and 
attractive  design,  a  piece  of  elegant  furniture,  or  of  bronze, 
porcelain,  or  pottery.  And  to  supply  the  new  and  miscel- 
laneous industries  that  are  created  or  enlarged  by  such  de- 
sires and  demands,  labor  will  be,  as  it  were,  constantly  drained 
off  from  occupations  in  which  improved  machinery  tends  to 


ECONOMIC  AXIOMS.  391 

supplant  it,  into  other  spheres  of  employment  in  which  the 
conditions  and  environments  are  every  way  elevating,  be- 
cause in  them  the  worker  is  less  of  a  machine,  and  the  re- 
wards of  labor  are  very  much  greater. 

The  phenomena  of  the  over-production,  or  unremunera- 
tive  supply  at  current  market  prices,  of  certain  staple  com- 
modities, although  for  the  time  being  often  a  matter  of 
difficulty  and  the  occasion  of  serious  industrial  and  commer- 
cial disturbances,  are  also  certain,  in  each  specific  instance, 
to  sooner  or  later  disappear  in  virtue  of  the  influence  of 
what  may  be  regarded  as  economic  axioms,  namely :  that 
we  produce  to  consume,  and  that,  unless  there  is  perfect 
reciprocity  in  consumption,  production  will  not  long  con- 
tinue in  a  disproportionate  ratio  to  consumption ;  and  also 
that,  under  continued  and  marked  reduction  of  prices,  con- 
sumption will  quickly  tend  to  increase  and  equalize,  or  ac- 
commodate itself  to  production.  Illustrations  of  the  actua 
and  possible  under  this  head,  and  of  the  rapidity  with  which 
conditions  are  reversed  and  "over-production"  disappears, are 
most  curious  and  instructive.  For  example,  all  authorities 
in  1885  were  agreed  that  the  then  existing  capacity  for 
manufacturing  cotton  was  greatly  in  excess  of  the  world's 
capacity  for  consumption;  the  season  of  1885-'86  closing 
with  a  surplus  of  nearly  400,000,000  yards  on  the  British 
market,  for  which  the  manufacturers  found  no  demand. 
Since  that  date,  however,  and  with  no  extraordinary  devel- 
opment of  business  activity  in  any  country,  the  world's  con- 
sumption of  cotton  fabrics  has  reached  a  larger  total  than 
ever  before,  and  there  are  probably  at  the  present  time 
(1889)  no  more  spindles  in  existence  than  are  necessary  to 
supply  the  current  and  immediately  prospective  demand  for 
their  products.  In  the  case  of  sugar,  also,  an  increase  in 
consumption  occasioned  by  low  prices,  and  a  notable  re- 
striction of  production  through  the  same  price  influences, 
reduced  an  estimated  actual  surplus  of  sugar  on  the  world's 
markets  in  October,  1885,  of  1,042,956  tons,  to  568,188  tons 


392  RECENT  ECONOMIC  CHANGES. 

in  October,  1887,  and  to  practically  nothing  in  January, 
1889. 

The  production  of  very  few  articles  has  increased  in  re- 
cent years  in  a  ratio  so  disproportionate  to  any  increase  of 
the  world's  population  as  that  of  iron,  and  prices  of  some 
standard  varieties  have  accordingly  touched  a  lower  range 
than  were  ever  before  known.  Gloomy  apprehensions  have 
accordingly  been  entertained  respecting  continued  over-pro- 
duction, and  its  disastrous  influence  in  the  future  on  the 
involved  capital  and  labor.  To  comprehend,  however,  the 
possibilities  for  this  industry  in  the  future,  it  is  only  neces- 
sary to  have  in  mind,  that  in  1882  (and  the  proportions 
have  not  probably  since  varied)  the  population  of  the  United 
States  and  of  Europe  (398,333,750),  comprising  about  one 
fourth  of  the  total  population  of  the  world  (1,424,686,000), 
consumed  nineteen  twentieths  of  the  whole  annual  produc- 
tion of  iron  and  steel,  and  that  if  the  population  of  the 
world  outside  of  Europe  and  the  United  States  should  in- 
crease their  annual  per  capita  consumption  of  iron  (which 
is  not  now  probably  in  excess  of  two  pounds)  to  only  one 
half  of  the  average  annual  per  capita  consumption  of  the 
people  of  a  country  as  low  down  in  civilization  as  Kussia, 
the  annual  demand  upon  the  existing  producing  capacity  of 
iron  would  be  at  once  increased  to  the  extent  of  over  six 
million  tons.  And,  when  it  is  further  remembered  that 
civilization  is  rapidly  advancing  in  many  countries,  like 
India,  where  the  present  annual  consumption  of  iron  per 
capita  is  very  small  (2*4  pounds),  and  that  civilization  can 
not  progress  to  any  great  extent  without  the  extensive  use 
of  iron,  the  possibilities  for  the  enormous  extension  of  the 
iron  industry  in  the  future,  and  the  enlarged  sphere  of  em- 
ployment of  capital  and  labor  in  connection  therewith,  make 
themselves  evident.* 


*  According  to  a  table  presented  to  the  British  Iron  Trade  Association  by 
Mr.  Jeans  in  1882,  and  subsequently  incorporated  in  a  report  submitted  by 


WORLD'S  CONSUMPTION  OF  IRON.  393 

As  constituting  a  further  contribution  to  the  study  of 
the  so-called  industrial  phenomenon  of  "  over-production," 
and  as  illustrating  how  a  greater  abundance  and  cheaper 
price  of  desirable  commodities,  work  for  the  equalization 
and  betterment  of  the  conditions  of  life  among  the  masses, 
the  recent  experience  of  the  article  of  quinine  should  not 
be  overlooked.  Owing  to  greatly  increased  and  cheaper 
supplies  of  the  cinchona-bark,  from  which  quinine  is  ex- 
tracted, and  to  the  employment  of  new  and  more  economi- 
cal processes,  by  which  more  quinine  can  be  made  in  from 
three  to  five  days  than  could  be  in  twenty  under  the  old 
system,  the  markets  of  the  world  in  recent  years  have  been 
overwhelmed  with  supplies  of  this  article,  and  its  price  has 
declined  in  a  most  rapid  and  extraordinary  manner,  namely : 
from  16s.  Qd.  ($4.iO)  the  ounce  in  the  English  market  in 
1877,  to  12s.  ($3)  in  1880 ;  3s.  Qd.  (84  cents)  in  1883 ;  and 
to  Is.  3d.  (30  cents),  or  less,  in  1887.  As  quinine  is  a  medi- 
cine, and  as  the  increase  in  the  consumption  of  medicines  is 
dependent  upon  the  real  or  fancied  increase  of  ill-health 
among  the  masses,  rather  than  on  any  reduced  cost  of  sup- 
ply (although,  in  the  case  of  this  specific  article,  decreased 
cost  has  undoubtedly  somewhat  increased  its  legitimate  con- 
Sir  Lowthian  Boll  to  the  British  Commission  "  On  the  Depression  of  Trade" 
in  1885  (and  from  which  the  above"~data  have  been  derived),  the  total  con- 
sumption of  iron  in  the  above  year  was  20,567,746  tons.  Of  this  aggregate, 
the  United  States  and  the  several  countries  of  Europe,  with  a  population  at 
that  time  of  398,333,750,  consumed  19,057,963  tons,  the  following  five  coun- 
tries, namely,  the  United  States,  the  United  Kingdom  of  Great  Britain,  France, 
Germany,  and  Belgium,  with  a  population  of  174,506,935,  consuming  16,259,« 
514  tons.  The  aggregate  consumption  of  iron  by  the  population  of  all  the 
other  countries  of  the  world  at  that  time  (assumed  to  be  1,424,686,570)  was 
estimated  at  1 ,509,783  tons,  or,  dedncting  the  consumption  of  the  population 
of  the  British  possessions  other  than  in  India  (as  Australia,  etc.),  at  only 
888,298  tons,  or  1'96  pound  per  head  per  annum.  The  annual  per  capita  con- 
sumption of  different  countries  in  1882  was  reported  as  follows  :  The  United 
Kingdom,  287  pounds ;  the  United  States,  270  pounds ;  Belgium,  238  pounds ; 
France,  149  pounds ;  Germany,  123  pounds ;  Sweden  and  Norway,  77  pounds ; 
Austrian  territories,  37  pounds ;  Eussia,  24-06  pounds ;  South  America  and 
the  islands,  13'5  pounds ;  Egypt,  7'5  pounds ;  India,  2'4  pounds. 


394  RECENT  ECONOMIC  CHANGES. 

sumption),  the  problem  of  determining  how  a  present  and 
apparently  future  over-production  was  to  be  remedied  has 
been  somewhat  difficult  of  solution.  But  recently  the  large 
manufacturers  of  Europe  have  made  an  arrangement  to  put 
up  quinine  (pills),  protected  by  gelatine,  and  introduce  and 
offer  it  so  cheaply  in  the  East  Indies  and  other  tropical 
countries,  as  to  induce  its  extensive  consumption  on  the 
part  of  a  vast  population  inhabiting  malarious  districts  which 
have  hitherto  been  deprived  of  the  use  of  this  valuable  spe- 
cific by  reason  of  its  costliness.  And  it  is  anticipated  that 
by  reason  of  its  cheapness  it  may,  to  a  considerable  extent, 
supersede  the  use  of  opium  among  the  poorer  classes  living 
along  the  Chinese  rivers,  who  it  is  believed  extensively 
consume  this  latter  pernicious  and  costly  drug,  not  so 
much  for  its  mere  narcotic  or  sensual  properties,  as  for 
the  relief  it  affords  to  the  fever  depression  occasioned  by 
malaria.* 

All  this  evidence,  therefore,  seems  to  lead  to  the  con- 
clusion that  there  is  little  foundation  for  the  belief  largely 
entertained  by  the  masses,  and  which  has  been  inculcated 
by  many  sincere  and  humane  persons,  who  have  undertaken 
to  counsel  and  direct  them,  that  the  amount  of  remunera- 
tive work  to  be  done  in  the  world  is  a  fixed  quantity,  and 
that  the  fewer  there  are  to  do  it  the  more  each  one  will  get ; 
when  the  real  truth  is,  that  work  as  it  were  breeds  work ; 
that  the  amount  to  be  done  is  not  limited ;  that  the  more 
there  is  done  the  more  there  will  be  to  do ;  and  that  the 
continued  increasing  material  abundance  which  follows  all 
new  methods  for  effecting  greater  production  and  distribu- 


*  One  curious  result  of  the  change  in  the  basis  of  the  world's  supply  of 
cinchona-bark  from  South  America  to  the  British  East  Indies  has  been  the 
almost  complete  collapse  of  a  formerly  large  item  of  the  export  trade  of  Co- 
lombia, South  America.  Thus,  the  annual  value  of  cinchona-bark  exported 
by  Colombia  as  recently  as  the  year  ]880  was  returned  at  £1,024,763  ($4,979,- 
358) ;  but  for  1887  the  maximum  value  of  its  export  was  not  in  excess  of 
£8,000  ($38,880). 


NON-ECONOMIC  FACTORS.  395 

tion  is  the  true  and  permanent  foundation  for  increasing 
general  prosperity. 

Again :  Some  pessimists,  looking  forward  to  the  occupa- 
tion and  highest  possible  tillage  of  all  the  land  on  the  earth's 
surface,  or  to  the  exhaustion  of  the  coal-supply,  will  per- 
haps urge  that  this  sanguine  view  has  necessarily  its  limita- 
tions. So,  too,  geologists  tell  us  that  all  the  water  on  the 
earth  is  being  gradually  absorbed  into  the  mass  of  the  planet, 
and  that  ultimate  universal  aridity  is  certain ;  and  some 
astronomers  say  that  the  earth's  axis  is  swinging  round  so 
as  to  bring  on  another  glacial  epoch.  But  we  are  not  deal- 
ing with  remote  cycles  and  millenniums,  of  which  we  know 
nothing ;  and  it  is  sufficient  for  the  present  to  alone  consider 
what  is  now  going  on  in  the  world,  and  what  we  have  every 
reason  to  believe  will  continue  under  substantially  the  same 
conditions  as  now  exist. 


X. 

Discontent  of  labor  in  consequence  of  changes  in  the  conditions  of  employ- 
ment— Subordination  to  method  and  routine  essential  to  all  systematized 
occupations — Compensations  therefrom — Benefits  of  the  capitalistic  sys- 
tem of  production — Werner  Siemens's  anticipations — Discontent  of  labor 
in  consequence  of  greater  intelligence — Best  definition  of  the  difference 
between  a  man  and  an  animal — Increase  in  personal  movement — Change 
in  character  of  the  English,  French,  and  German  people — What  is  social- 
ism 1 — Meaning  of  progressive  material  and  social  development — Advance 
in  wages  in  Great  Britain,  the  United  States,  and  France — Coincident 
change  in  the  relative  number  of  the  lowest  class  of  laborers — Eelation 
of  wages  to  the  cost  of  living — Increase  in  expenditures  for  rent — Curious 
demonstration  of  the  improved  condition  of  the  masses — Eeduction  of  the 
hours  of  labor — Why  wages  have  risen  and  the  price  of  commodities 
fallen  — Impairment  of  the  value  of  capital — Reduction  of  the  rates  of  in- 
terest— Decline  in  land  values. 

ATTENTION"  is  next  asked  to  the  second  (assumed)  cause 
for  the  prevailing  discontent  of  labor,  namely : 

Changes  in  the  character  or  nature  of  employments  con- 
sequent upon  the  introduction  of  new  methods — machinery 
or  processes — which  it  is  claimed  have  tended  to  lower  the 
grade  of  labor,  impair  the  independence,  and  restrict  the 
mental  development  of  the  laborer. 

That  such  changes  have  been  in  the  nature  of  evil,  can 
not  be  questioned  ;  but  they  are  not  new  in  character,  nor 
as  extensive  in  number  and  effect  as  is  popularly  supposed. 
Subordination  to  routine  and  method  is  an  essential  element 
in  all  systematized  occupations ;  and  in  not  a  few  employ- 
ments and  professions — as  in  all  military  and  naval  life, 
and  in  navigation  and  railroad  work — an  almost  complete 
surrender  of  the  independence  of  the  individual,  and  an  un- 
reasoning mechanical  compliance  with  rules  or  orders,  are 


EXTREME  DIVISION  OF  LABOR.  397 

the  indispensable  conditions  for  the  attainment  of  any  degree 
of  successful  effort.  In  very  many  cases  also  the  individual 
finds  compensation  for  subordination  and  the  surrender  of 
independence  in  the  recognition  that  such  conditions  may 
be  but  temporary,  and  are  the  necessary  antecedents  for 
promotion ;  and  routine  and  monotony  are  doubtless  in  a 
greater  or  less  degree  alleviated  when  the  operative  can  dis- 
cern the  plan  of  his  work  as  an  entirety,  and  note  its  result 
in  the  form  of  finished  products.  But  in  manufacturing 
operations,  where  the  division  of  labor  has  been  carried  to 
an  extreme,  where  the  product  of  the  worker  is  never  more 
than  a  fraction  of  any  finished  "  whole,"  and  where  no 
greater  demand  is  made  upon  the  brain  than  it  shall  see  to 
it  that  the  muscles  of  the  arm,  the  hand,  or  the  finger  exe- 
cute movements  at  specific  times  and  continuously  in  con- 
nection with  machinery,  there  are  few  such  compensations 
or  alleviations ;  and  the  general  result  to  the  individual 
working  under  such  conditions  can  not,  to  say  the  least, 
be  in  the  line  of  either  healthy  mental  or  physical  develop- 
ment. 

Happily,  however,  the  number  of  industries,  in  which 
the  division  of  labor  and  its  subordination  to  machinery 
has  been  productive  of  such  extreme  results,  is  not  very 
large ;  the  manufacture  of  boots  and  shoes  by  modern  ma- 
chine methods,  in  which  every  finished  shoe  is  said  to  rep- 
resent sixty-two  distinct  mechanical  employments  or  prod- 
ucts, being  perhaps  the  most  notable.  And  yet  even  here 
there  is  not  a  little  in  way  of  compensating  benefit  to  be 
credited  to  such  a  system.  Thus,  for  example,  it  is  stated 
that  "the  use  of  machinery  has  compelled  employes  to 
apply  themselves  more  closely  to  their  work;  and,  being 
paid  by  the  piece,  has  enabled  them  to  make  better  wages." 
When  shoemaking  was  a  handicraft,  "  the  hours  of  labor 
were  very  irregular ;  the  workmen,  who  decided  their  own 
hours  of  labor,  working  some  days  only  a  few  hours,  and 
then  working  far  into  the  night  for  a  few  days  to  make  up 

18 


398  RECENT  ECONOMIC  CHANGES. 

for  lost  time.  It  was  once  customary  for  shoemakers  (in 
New  England)  to  work  on  an  average  fifteen  hours"  a  day  "  ; 
now  the  hours  of  labor  in  the  shoe-factories  .are  not  in  ex- 
cess of  ten  hours.  It  is  also  claimed  that  the  introduction 
of  the  sewing-machine  into  the  manufacture  of  boots  and 
shoes  has  greatly  increased  the  opportunities  for  the  em- 
ployment of  women,  at  better  rates  of  wages.  In  the  manu- 
facture clothing,  which,  in  routine  and  monotony,  is  analo- 
gous to  the  manufacture  of  boots  and  shoes,  it  is  generally 
conceded  that  the  influence  of  the  sewing-machine  has  been 
to  increase  wages,  and  that,  "  notwithstanding  the  constantly 
growing  use  of  these  machines,  the  number  of  employes  is 
greater  than  formerly,  owing  to  the  enlargement  of  the 
business."*  Furthermore,  the  "  collective  work  which  ad- 
mits of  being  carried  on  by  the  factory  principle  of  great 
subdivision  of  labor  and  by  the  bringing  together  of  large 
numbers  of  people  under  one  roof  and  one  control "  does 
not  at  present,  in  the  United  States,  give  occupation  to 
more  than  one  in  ten  of  all  who  follow  gainful  occupations 
in  the  whole  country ;  while  for  the  other  nine  the  essential 
elements  of  industrial  success  continue,  as  of  old,  to  be  found 
in  individual  independence  and  personal  mental  capacity; 
and  this  experience  of  the  United  States  will  probably  find 
a  parallel  in  all  other  manufacturing  countries. 

The  supersedure  of  men  by  women  and  young  persons 
in  textile  manufactories,  which  (as  previously  noticed)  has 
occurred  to  such  an  extent  in  New  England  that  certain 
factory  towns  have  come  to  be  popularly  designated  as  "  she- 
towns,"  at  first  thought  seems  deplorable.  But,  on  the  other 
hand,  it  is  certain  that  such  supersedure  has  been  mainly 
the  result  of  such  a  diminution  of  the  severity  of  toil 
through  the  improvements  in  machinery,  or  such  a  greater 
division  of  labor  consequent  upon  new  methods  of  produc- 

*  "  Report  on  the  Statistics  of  Wages,"  J.  D.  "Weeks,  United  States  cen- 
sus, vol.  xx. 


ADVANTAGES  OF  THE  CAPITALISTIC  SYSTEM.    399 

tion,  as  have  opened  up  new  opportunities  for  employment 
to  women  by  making  it  possible  for  them  to  easily  do  work 
which,  under  old  systems,  required  the  greater  strength  and 
endurance  of  men ;  children,  for  example,  being  able  to 
spin  yarn  on  a  "  ring-frame,"  which  men  alone  were  able  to 
do  on  a  "spinning-mule."  And,  however  such  changes 
may  be  regarded  from  the  standpoint  of  the  men  operatives, 
the  greater  opportunity  afforded  for  continuous  work  at 
greater  wages  than  could  be  readily  obtained  in  other  occu- 
pations, is  probably  not  regarded  by  the  women  operatives 
in  the  light  of  a  misfortune.  Experience  also  shows  that 
the  larger  the  scale  on  which  capitalistic  production  and  dis- 
tribution is  carried  on,  "  the  less  it  can  countenance  the 
petty  devices  for  swindling  and  pilfering,"  and  the  neglect 
and  disregard  of  the  health,  safety,  and  comfort  of  opera- 
tives, which  so  generally  characterize  industrial  enterprises 
on  a  small  scale ;  or,  in  other  words,  the  maintenance  of  a 
high  standard  of  industrial  and  commercial  morality  is  com- 
ing to  be  recognized  by  the  managers  of  all  great  enterprises 
as  a  means  of  saving  time  and'  avoiding  trouble,  and  there- 
fore as  an  undoubted  and  important  element  of  profit.  And 
it  is  to  these  facts — the  natural  and  necessary  growth  of 
what  has  been  termed  the  "  capitalistic  system  " — that  a  re- 
cent English  writer  on  the  condition  of  the  working-classes 
largely  attributes  the  suppression  of  the  truck  (store)  sys- 
tem, the  enactment  of  laws  limiting  the  hours  of  labor,  the 
acquiescence  in  the  existence  and  power  of  trade-unions,  and 
the  increasing  attention  to  sanitary  regulations;  reforms 
that  have  reformed  away  the  worst  features  of  the  condition 
of  labor  as  it  existed  thirty  or  forty  years  ago  in  Great  Brit- 
ain.* The  larger  the  concern,  the  greater  usually  the  steadi- 
ness of  employment,  and  the  more  influential  the  public 
opinion  of  the  employed. 

*  "  The  Condition  of  tbc  Working  Class  in  England  in  1844,"  by  Frederick 
Engles. 


400  KECENT  ECONOMIC  CHANGES. 

Dr.  Werner^  Siemens,  the  celebrated  German  scientist 
and  inventor,  in  a  recent  address  at  Berlin  on  "  Science  and 
the  Labor  Question,"  claimed  that  the  necessity  for  exten- 

factories  and  workshops — involving  large  capital  and  an 
"  slavish  "  discipline  for  labor — to  secure  the  maxi- 
um  cheapness  in  production,  "  was  due,  to  a  great  extent, 
to  the  yet  imperfect  development  of  the  art  of  practical 
mechanics  " ;  and  that  mechanical  skill  will  ultimately  effect 
"  a  return  to  the  system  (now  almost  extinct)  of  independ- 
ent, self-sustaining  domiciliary  labor "  by  the  introduction 
of  cheap,  compact,  easily  set  up  and  operated  labor-saving 
machinery  into  the  smaller  workshops  and  the  homes  of  the 
workingmen.  Should  the  difficulties  now  attendant  upon 
the  transmission  of  electricity  from  points  where  it  can  be 
cheaply  generated,  and  its  safe  and  effective  subdivision  and 
distribution  as  a  motive  force  be  overcome  (as  it  is  not  im- 
probable they  ultimately  will  be),  thus  doing  away  with  the 
necessity  of  multiplying  expensive  and  cumbersome  machin- 
ery—  steam-engines,  boilers,  dams,  reservoirs,  and  water- 
wheels — for  the  local  generation  and  application  of  mechani- 
cal power,  there  can  be  no  doubt  that  most  radical  changes 
in  the  use  of  power  for  manufacturing  purposes  will  speedily 
follow,  and  that  the  anticipations  of  Dr.  Siemens,  as  to  the 
change  in  the  relations  of  machinery  to  its  operatives,  may 
at  no  distant  day  be  realized. 

The  third  cause  which  has  especially  operated  in  recent 
years  to  occasion  discontent  on  the  part  of  labor  has  been 
undoubtedly  the  increase  in  intelligence  or  general  informa- 
tion on  the  part  of  the  masses  in  all  civilized  countries. 

The  best  definition,  or  rather  statement,  of  the  essential 
difference  between  a  man  and  an  animal,  that  has  ever  been 
given  is,  that  a  man  has  progressive  wants,  and  an  animal 
has  not.  Under  the  guidance  of  what  is  termed  instinct, 
the  animal  wants  the  same  habitat  and  quantity  and  quality 
of  food  as  its  progenitors,  and  nothing  more.  And  the  more 
nearly  man  approaches  in  condition  to  the  animal,  the  more 


INTELLIGENCE  AN  ELEMENT  OF  DISCONTENT.    401 

limited  is  the  sphere  of  his  wants,  and  the  greater  his  con- 
tentment. A  greater  supply  of  blubber  and  skins  to  the 
Eskimo,  more  "  pulque  "  to  the  native  Mexican,  to  the  West 
Indian  negro  a  constant  supply  of  yams  and  plantains  with- 
out labor,  and  the  ability  to  buy  five  salt  herrings  for  the 
same  price  that  he  has  now  to  give  for  three,  would,  in  each 
case,  temporarily  fill  the  cup  of  individual  happiness  nearly 
to  repletion.  And,  among  civilized  men,  the  contentment 
and  also  sluggishness  of  those  neighborhoods  in  which  the 
population  come  little  in  contact  with  the  outer  world  and 
have  little  of  diversity  of  employment  open  to  them,  are 
proverbial. 

Now  the  wonderful  material  progress  which  has  been 
made  within  the  last  quarter  of  a  century  has  probably  done 
more  to  overcome  the  inertia,  and  quicken  the  energy  of  the 
masses,  than  all  that  has  been  hitherto  achieved  in  this  di- 
rection in  all  preceding  centuries.  The  railroad,  the  steam- 
ship, and  the  telegraph  have  broken  down  the  barriers  of 
space  and  time  that  formerly  constituted  almost  insuperable 
obstacles  in  the  way  of  frequent  intercourse  between  people 
of  different  races,  countries,  and  communities,  and  have 
made  the  civilized  world,  as  it  were,  one  great  neighborhood. 
Every  increased  facility  that  is  afforded  for  the  dissemina- 
tion of  intelligence,  or  for  personal  movement,  finds  a  mar- 
velously  quick  response  in  an  extended  use.  The  written 
correspondence — letters  and  cards — exchanged  through  the 
world's  postal  service,  more  than  doubled  between  the  years 
1873  and  1885 ;  while  in  the  United  States  the  number  of 
people  annually  transported  on  railroads  alone  exceeds  every 
year  many  times  the  total  population  of  the  country,  the 
annual  number  for  the  New  England  States  being  more 
than '  sixteen  times  greater  than  their  population.  Under 
these  powerful  but  natural  educating  influences,  there  has 
been  a  great  advance  in  the  intelligence  of  the  masses. 
They  have  come  to  know  more  of  what  others  are  doing ; 
know  better  what  they  themselves  are  capable  of  doing; 


402  RECENT  ECONOMIC  CHANGES. 

and  their  wants  have  correspondingly  increased,  not  merely 
in  respect  to  quantities  of  the  things  to  which  they  have 
always  been  accustomed,  but  very  many  articles  and  services 
which  within  a  comparatively  recent  period  were  regarded 
as  luxuries,  are  now  almost  universally  considered  and  de- 
manded as  necessaries.  At  the  same  time,  the  increased 
power  of  production  and  distribution,  and  the  consequent 
reduction  in  the  cost  of  most  commodities  and  services,  have 
also  worked  for  the  satisfaction  of  these  wants  in  such  a 
degree  that  a  complete  revolution  has  been  effected  during 
recent  years  in  the  every-day  life  of  all  classes  of  the  people 
of  the  great  industrial  and  commercial  countries.  Let  any 
any  one  compare  the  condition  of  even  the  abject  poor  of 
London,  as  described  in  recent  publications,  with  the  con- 
dition of  English  laborers  as  described  by  writers  of  ac- 
knowledged authority  not  more  than  forty  years  ago,*  and 
he  can  not  resist  the  conclusion  that  the  very  outcasts  of 
England  are  now  better  provided  for  than  were  multitudes 
of  her  common  laboring-men  at  the  period  mentioned,  f 

*  The  condition  of  agricultural  laborers  in  general,  and  large  classes  of  ar- 
tisans, in  the  United  Kingdom,  forty  or  fifty  years  ago,  as  described  by  Car- 
lyle  in  his  "  Past  and  Present"  and  "  Sartor  Eesartus,"  and  by  another  most 
reliable  English  authority,  Mr.  W.  T.  Thornton,  in  his  "  Over-population  and 
its  Remedy,"  was  so  deplorable  that  it  is  now  difficult  to  realize  that  it  ever 
existed. 

t  What  an  enormous  stride  has  been  made  in  the  amelioration  of  the  con- 
dition of  the  masses  of  the  people  of  England,  taking  a  more  lengthened  period 
into  consideration,  is  strikingly  illustrated  by  the  following  description,  based 
on  authentic  data,  by  Kev.  Augustus  Jessop,  of  the  condition  of  the  people 
of  the  parish  of  Eougham,  in  the  time  of  Henry  III  (1216-1272) : 

"  The  people  who  lived  in  this  village  six  hundred  years  ago  were  living  a 
life  hugely  below  the  level  of  yours.  They  were  more  wretched  in  their  pov- 
erty ;  they  were  incomparably  less  prosperous  in  their  prosperity ;  they  were 
worse  clad,  worse  fed,  worse  housed,  worse  taught,  worse  tended,  worse  gov- 
erned ;  they  were  sufferers  from  loathsome  diseases  which  you  know  nothing 
of;  the  very  beasts  in  the  field  were  dwarfed  and  stunted  in  their  growth, 
and  I  do  not  believe  there  were  any  giants  on  the  earth  in  those  days.  The 
death-rate  among  the  children  must  have  been  tremendous.  The  disregard  of 
human  life  was  so  callous  that  we  can  hardly  conceive  it.  There  was  every- 
thing to  harden,  nothing  to  soften ;  everywhere  oppression,  greed,  and  fierce- 


INFLUENCE  OP  TRAVEL.  403 

The  widening  of  the  sphere  of  one's  surroundings,  and  a 
larger  acquaintance  with  other  men  and  pursuits,  have  long 
been  recognized  as  not  productive  of  content.*    Writing  to 
his  nephew  more  than  one  hundred  years  ago,  Thomas  Jef- 
ferson thus  concisely  expressed  the  results  of  his  own  obser- 
vation :   "  Traveling,"  he  says,  "  makes  men  wiser,  but  less  j 
happy.     When  men  of  sober  age  travel  they  gather  knowl-  I 
edge,  but  they  are,  after  all,  subject  to  recollections  mixed  J 
with  regret ;  their  affections  are  weakened  by  being  extended  I 
over  more  objects,  and  they  learn  new  habits  which  can  not/ 
be  gratified  when  they  return  home."    Again,  as  the  former  I 
few  and  simple  requirements  of  the  masses  have  become 
more  varied  and  costly,  the  individual  effort  necessary  for 
the  satisfaction  of  the  latter  is  not  relatively  less,  even  under 
the  new  conditions  of  production,  than  before,  and  in  many 
instances  is  possibly  greater.     Hence,  notwithstanding  the 
large  advance  in  recent  years  in  the  average  rates  of  wages, 
and  a  greatly  increased  purchasing  power  of  wages,  there  is 

ness.  The  law  of  the  land  was  hideously  cruel  and  merciless,  and  the  gallows 
and  the  pillory — never  far  from  any  man's  door — were  seldom  allowed  to  remain 
long  out  of  use.  The  ghastly  frequency  of  the  punishment  of  death  tended  to 
make  people  savage  and  bloodthirsty.  It  tended,  too,  to  make  men  absolutely 
reckless  of  consequences  when  once  their  passions  were  roused.  '  As  well  be 
hung  for  a  sheep  as  a  Limb,'  was  a  saying  that  had  a  grim  truth  in  it.  The 
laborer's  dwelling  had  no  windows ;  the  hole  in  the  roof  which  let  out  the 
smoke  rendered  windows  unnecessary.  The  laborer's  fire  was  in  the  middle 
of  his  house ;  he  and  his  wife  and  children  huddled  around  it,  sometimes 
groveling  in  the  ashes ;  and  going  to  bed  meant  flinging  themselves  down 
upon  straw.  The  laborer's  only  light  at  night  was  the  smoldering  fire.  Why 
should  he  burn  a  rush-light  when  there  was  nothing  to  look  at  ? 

"  Should  we  like  to  change  with  these  forefathers  of  ours,  whose  lives  were 
passed  in  the  way  described,  six  hundred  years  ago  ?  Were  the  former  times 
better  than  these  ?  Has  the  world  grown  worse  as  it  has  grown  older  ?  Has 
there  been  no  progress,  but  only  decline  ? " 

*  Increased  facility  for  communication  between  Great  Britain  and  the  United 
States  has  without  doubt  been  a  large  factor  in  occasioning  the  present  pro- 
found discontent  of  Ireland ;  and  political  subjugation  and  their  existing  land 
system  have  been  more  intolerable  to  the  Irish  peasant  and  artisan,  since  they 
have  been  enabled  to  compare  the  institutions  under  which  they  live  with 
those  which  their  expatriated  fellow-countrymen  enjoy  elsewhere. 


404  RECENT  ECONOMIC  CHANGES. 

no  less  complaint  than  ever  of  the  cost  of  living ;  when  (as 
M.  Leroy-Beaulieu  has  pointed  out  in  the  case  of  France  *) 
the  foundation  for  the  complaint  is  for  the  most  part  to  be 
found  in  the  circumstance  that  a  totally  different  style  of 
living  has  been  adopted,  and  that  society  makes  conformity 
with  such  different  style  a  standard  of  family  respectability. 
The  change  in  the  character  of  the  people  of  Germany  in 
respect  to  content  since  the  Franco-German  War  in  1871,  is 
especially  noticeable.  Before  the  war  the  unpretending,  sta- 
tionary habits  of  the  people  tended  to  make  every  one  con- 
tented with  his  lot  and  averse  to  social  changes.  The  war, 
with  its  excitements  and  triumphs,  and  the  establishment 
of  the  empire,  which  was  conditioned  upon  and  accompanied 
by  the  enactment  of  a  multitude  of  laws  freeing  the  social 
life  of  the  people  from  a  multitude  of  restrictions  by  which 
it  was  formerly  bound,  effected  a  complete  metamorphosis, 
and  this,  coinciding  with  a  Ijrief  period  of  great  commercial 
activity  and  wild  speculation  (see  pages  4,  5),  created  a  pro- 
found impression  upon  the  masses  of  the  people,  and  seems 
to  have  changed  permanently  and  in  a  great  degree  their 
former  character.  Germany  before  the  war  was  a  country 
of  comparatively  cheap  living  and  production.  To-day  it 
is  not. 

There  is,  therefore,  unquestionably  in  these  facts  an  ex- 
planation in  no  small  part  of  what  to  many  has  seemed  one 
of  the  greatest  puzzles  of  the  times — namely,  that  with  un- 
doubtedly greater  and  increasing  abundance  and  cheapness  of 
most  desirable  things,  popular  discontent  with  the  existing 
economic  condition  of  affairs  does  not  seem  to  diminish,  but 
rather  to  greatly  increase.  And  out  of  such  discontent,  which 
is  not  based  on  anything  akin  to  actual  and  unavoidable 
poverty,  has  originated  a  feeling  that  the  new  conditions  of 
abundance  should  be  further  equalized  by  some  other  meth- 

*  "  The  Fall  in  the  Price  of  Commodities ;  its  Cause  and  Effect."    By 
Leroy-Beaulieu. — Economists  Franyaise,  April,  1887. 


WHAT  IS  SOCIALISM?  405 

ods  than  intelligent  individual  effort,  self-denial,  and  a  nat- 
ural, progressive  material  and  social  development  (the  actu- 
ality of  which  is  proved  by  all  experience) ;  and  that  the 
state  could,  if  it  would,  make  all  men  prosperous ;  and  there- 
fore should,  in  some  way  not  yet  clearly  denned  by  anybody, 
arbitrarily  intervene  and  effect  it.  And  this  feeling,  so  far  as 
it  assumes  definiteness  of  idea  and  purpose,  constitutes  what 
is  called  "socialism."* 

As  it  is  important  to  make  clear  the  full  force  and  meaning  of  the 
term  "  self-denial "  and  "  natural  progressive  material  and  social  devel- 
opment," as  above  used,  attention  is  asked  to  the  following  consider- 
ations :  The  investigations  of  Mr.  Atkinson  show  that  an  increase  of 
five  cents'  worth  of  material  comfort  per  day,  for  every  day  in  the 
year,  to  each  inhabitant  of  the  United  States,  would  require  the  annual 
production  and  equitable  distribution  of  more  than  J  1.000.000.000 
worth  of  commodities !  In  the  last  analysis,  therefore,  national  pros- 
perity and  adversity  are  measurable  by  a  difference  which  is  not  in  ex- 
cess of  the  price  of  a  daily  glass  of  beer ;  or,  if  five  cents'  worth  of 
product  for  each  inhabitant  could  be  added  to  the  capital  of  the  coun- 
try in  excess  of  the  average  for  each  day  in  the  year,  such  a  year,  by 
reason  of  its  increased  exchanges  and  sum  of  individual  satisfactions, 
could  not  be  other  than  most  prosperous. 

*  On  this  point  the  Commissioner  of  the  Bureau  of  Labor  Statistics  of  the 
State  of  Connecticut,  in  his  report  for  1887,  speaks  as  follows :  "  Necessary 
wants  have  multiplied,  and  society  demands  so  much  in  the  style  of  living 
that  the  laboring-man  finds  it  almost  impossible  to  live  as  respectably  now  on 
his  wages  as  his  father  did  thirty  years  since  upon  his.  That  is,  wages  have 
not  kept  pace  with  the  increasing  wants  and  style  of  living  demanded  by  soci- 
ety. The  laborer  thinks  he  sees  a  wider  difference  between  the  style  in  which 
his  employer  lives  and  the  way  he  is  compelled  to  live,  than  existed  between 
employer  and  employe's  thirty  years  ago.  He  thinks  that  this  difference  is 
growing  greater  with  the  years.  Now,  as  a  man's  income  is,  in  general, 
measured  by  his  style  of  living,  he  can  not  resist  the  conclusion  that  a  larger 
share  of  the  profits  of  business  goes  to  his  employer  than  employers  received 
in  former  years ;  that  the  incomes  of  employers  have  increased  more  rapidly 
than  the  wages  of  employe's.  The  laboring  people  are  fully  alive  to  the  fact 
that  modern  inventions  and  the  like  make  larger  incomes  possible  and  right. 
They  do  not  complain  of  these  larger  incomes,  but  they  do  believe  most  pro- 
foundly that  they  are  not  receiving  their  fair  share  of  the  benefits  conferred 
upon  society  by  these  inventions  and  labor-saving  machines.  In  this  belief 
lies  the  principal  source  of  their  unrest." 


406  RECENT  ECONOMIC  CHANGES. 

Again,  the  extraordinary  and  comparatively  recent  reductions  in 
the  cost  of  transportation  of  commodities  by  land  and  water  (in  the 
case  of  the  New  York  Central  and  Hudson  River  Railroad,  for  exam- 
ple, from  an  average  of  3*45  cents  per  ton  per  mile  in  1865  to  0*68  of 
a  cent  in  1885),  which  have  reduced  the  prices  of  the  common  articles 
of  food  to  the  masses  to  the  extent  of  substantially  one  half,  did  not 
involve  in  their  conception  and  carrying  out  any  idea  of  benefiting 
humanity ;  but  on  the  contrary  those  immediately  concerned  in  effect- 
ing the  improvements  that  have  led  to  such  results  never  would  have 
abated  the  rates  to  the  public,  but  would  have  controlled  and  main- 
tained them  to  their  own  profit,  had  they  been  able.  But,  by  the  force 
of  agencies  that  have  been  above  human  control,  they  have  not  only 
not  been  able  to  do  so,  but  have  been  constrained  to  promptly  accept 
business  at  continually  decreasing  rates,  as  a  condition  of  making  any 
profit  for  themselves  whatever.  And  what  is  true  of  the  results  of 
improvements  in  the  transportation  of  products  is  equally  true  of  all 
methods  for  economizing  and  facilitating  their  production.  They  are 
all  factors  in  one  great  natural  movement  for  continually  increasing 
and  equalizing  abundance. 

With  this  analysis  of  the  causes  of  the  prevailing  and 
almost  universal  discontent  of  labor,  the  following  other 
results — industrial  and  social — which  have  been  attendant 
upon  the  world's  recent  material  progress  are  worthy 
of  consideration  by  all  desirous  of  fully  comprehending 
the  present  economic  situation,  and  the  outlook  for  the 
future. 

ADVANCE  IN"  WAGES. — The  average  rate  of  wages,  or 
the  share  which  the  laborer  receives  of  product,  has  within 
a  comparatively  recent  period,  and  in  almost  all  countries — 
certainly  in  all  civilized  countries — greatly  increased.  The 
extent  of  this  increase  since  1850,  and  even  since  1860,  has 
undoubtedly  exceeded  that  of  any  previous  period  of  equal 
duration  in  the  world's  history. 

Mr.  Giffen  claims,  as  the  result  of  his  investigations  for 
Great  Britain,  that  "  the  average  money- wages  of  the  work- 
ing-classes of  the  community,  looking  at  them  in  the  mass, 
and  comparing  the  mass  of  fifty  years  ago  with  the  mass  at 
the  present  time,  have  increased  very  nearly  one  hundred 


ADVANCE  IN  WAGES.'  407 

per  cent.*  It  is  also  conceded  of  this  increase  in  Great 
Britain  that  by  far  the  largest  proportion  has  occurred 
within  the  later  years  of  this  period,  and  has  been  concur- 
rent with  the  larger  introduction  and  use  of  machinery. 
Thus  the  investigations  of  Mr.  James  Caird  show,  that  the 
advance  in  the  average  rate  of  wages  for  agricultural  labor 
in  England  in  the  twenty-eight  years  between  1850  and 
1878  was  forty-five  per  cent  greater  than  the  entire  advance 
that  took  place  in  the  eighty  years  next  preceding  1850. 

Mr.  Giffen  has  also  called  attention  to  an  exceedingly 
interesting  and  encouraging  feature  which  has  attended  the 
recent  improvement  in  money- wages  in  Great  Britain — and 
which  probably  finds  correspondence  in  other  countries; 
and  that  is,  that  the  tendency  of  the  economic  changes  of 
the  last  fifty  years  has  been  not  merely  to  augment  the 
wages  of  the  lowest  class  of  labor,  but  also  to  reduce  in  a 
marked  degree  the  proportion  of  this  description  of  labor  to 
the  total  mass — "  its  numbers  having  diminished  on  account 
of  openings  for  labor  in  other  directions.  But  this  diminu- 
tion has  at  the  same  time  gone  along  with  a  steady  improve- 
ment in  the  condition  of  the  most  unskilled  laborers  them- 
selves." So  that,  if  there  had  been  no  increase  whatever  in 
the  average  money-wages  of  Great  Britain  in  recent  years, 
the  improvement  in  the  general  condition  of  the  masses  in 
that  country  "must  have  been  enormous,  for  the  simple 
reason  that  the  population  at  the  higher  rate  of  wages  has 
increased  disproportionately  to  the  others."  One  of  the 
most  interesting  and  unquestionably  one  of  the  most  accu- 
rate investigations  respecting  the  range  of  wages  since  1850, 


*  This  statement  was  first  made  by  Mr.  Giffen  in  1883,  in  his  inaugural 
address  as  President  of  the  Royal  Statistical  Society  of  England,  and  was 
received  with  something  of  popular  incredulity.  But  recurring  to  the  same 
subject  in  another  communication  to  the  same  society  in  1886,  Mr.  Giffen 
asserts  that  further  investigations  show  that  there  is  no  justification  whatever 
for  any  doubts  that  may  have  been  entertained  as  to  the  correctness  of  his 
assertions. 


408  RECENT  ECONOMIC  CHANGES. 

in  the  leading  industries  of  Great  Britain,  was  prepared  in 
1883  by  Mr.  George  Lord,  President  of  the  Manchester 
(England)  Chamber  of  Commerce,  which  showed  that  the 
percentage  increase  in  the  average  wages  paid  in  eleven  of 
the  leading  industries  of  that  city  between  1850  and  1883 
was  forty  per  cent;  the  increase  ranging  from  10-30  per 
cent  in  mechanical  engineering  (fitters  and  turners)  to  74'72 
per  cent  in  the  case  of  other  mechanics  and  in  medium 
cotton  spinning  and  weaving. 

At  the  meeting  of  the  "  Industrial  Remuneration  Con- 
ference "  at  London,  in  1885,  Sir  Lowthian  Bell  stated  that 
in  the  chemical  manufacturing  industries  on  the  Tyne, 
England,  employing  nineteen  thousand  workmen  directly, 
wages  had  been  increased  within  his  own  knowledge  in  the 
last  twenty-five  years  thirty-seven  and  a  half  per  cent, 
while  during  the  same  period  the  average  value  of  the  prod- 
ucts had  declined  forty  per  cent.  He  also  added  that  all 
the  evidence  received  from  France,  Germany,  Belgium,  and 
Austria  goes  to  prove  that  while  during  the  last  forty  years 
the  cost  of  living  in  all  these  countries  had  been  notably 
augmented  (with  an  accompanying  rise  of  wages)  in  the 
United  Kingdom  under  free-trade  measures,  with  a  large 
average  rise  in  wages,  the  cost  of  living  has  sensibly  dimin- 
ished. 

In  the  United  States,  according  to  the  data  afforded  by 
the  census  returns  for  1850  and  1880,  the  average  wages 
paid  for  the  whole  country  increased  during  the  interval  of 
these  years  by  39*9  per  cent;  or  in  a  slightly  smaller  ratio 
of  increase  than  was  experienced  during  the  same  period  in 
the  industries  of  that  district  of  England  of  which  its  city 
of  Manchester  is  the  center.  The  figures  of  the  United 
States  census  of  1850  can  not,  however,  be  accepted  with 
confidence.* 


*  It  is  at  the  same  time  not  a  little  significant  that  the  Commissioner  of  the 
Massachusetts  Bureau  of  Labor  Statistics  should  have  reported  in  1884,  as  the 


WAGES  IN  THE  UNITED  STATES.  409 

As  respects  agricultural  labor  in  the  United  States,  the 
assertion  is  probably  warranted  that,  taking  into  account 
the  hours  of  work,  rates  of  wages,  and  the  prices  of  commod- 
ities, the  average  farm-laborer  is  one  hundred  per  cent 
better  off  at  the  present  time  than  he  was  thirty  or  forty 
years  ago.  In  Massachusetts  the  average  advance  in  the 
money-wages  of  this  description  of  labor  between  1850  and 
1880  was  fifty-six  per  cent,  with  board  in  addition.  Between 
1842  and  1846  the  wages  of  agricultural  labor  in  the  United 
States  sank  to  almost  the  lowest  points  of  the  century. 
According  to  the  investigations  of  the  Massachusetts  Bureau 
of  Labor  Statistics,  the  average  advance  in  general  wages  in 
that  State  from  1860  to  1883  was  28'36  per  cent,  while  the 
conclusions  of  Mr.  Atkinson  are  that  the  wages  of  mechanics 
in  Massachusetts  were  twenty-five  per  cent  more  in  1885 
than  they  were  in  1860. 

A  careful  investigation  instituted  by  the  Bureau  of  Labor 
Statistics  for  Connecticut  of  the  comparative  wages  paid  in 
the  brass,  carpet,  clock,  silk,  and  woolen  industries  of  that 
State  in  1860  and  1887,  and  the  comparative  cost  of  the 
necessaries  of  life  to  the  operatives  at  the  same  periods  (see 
report  for  1888),  gave  the  following  results:  average  ad- 
vance in  the  wages  of  males  about  forty-three  per  cent,  and 
of  females  fifty-seven  per  cent ;  decline  in  the  price  of 
staple  dry  goods,  thirty-nine  per  cent ;  of  carpets,  thirty-six 
per  cent;  increase  in  the  average  price  of  groceries  and 
provisions,  ten  and  a  half  per  cent.  "  There  was  an  average 
advance  in  the  retail  price  of  such  kinds  and  cuts  of  meat 
as  are  common  to  the  market  reports  of  both  dates  of  thirty- 
three  per  cent." 

Taking  the  experience  of  the  cities  of  St.  Paul  and 
Minneapolis  as  a  basis,  recent  investigations  also  show  a 

result  of  his  investigations,  that  while  from  1872  to  1883  wa^es  advanced  on 
an  average  9 '74  per  cent  in  Great  Britain,  they  declined  on  the  average  in 
Massachusetts  during  the  same  period  5*41  per  cent. 


410  RECENT  ECONOMIC  CHANGES. 

marked  increase  in  the  average  wages  of  all  descriptions  of 
labor  in  the  Northwestern  sections  of  the  United  States, 
comparing  1886  with  1875,  of  at  least  ten  per  cent.  In  all 
railroad- work,  the  fact  to  which  Mr.  Giffen  has  called  atten- 
tion as  a  gratifying  result  of  recent  English  experience  also 
here  reappears — namely,  that  the  proportion  of  men  earning 
the  highest  rates  of  wages  is  much  greater  than  it  was  ten 
years  ago,  or  more  skilled  workmen  and  fewer  common 
workmen  are  relatively  employed. 

A  series  of  official  statistics,  published  in  the  "  Annuaire 
Statistique  de  la  France,"  respecting  the  rates  of  wages  paid 
in  Paris  and  in  the  provinces  of  France  in  twenty-three 
leading  industries,  during  the  years  1853  and  1883  respect- 
ively, show  that,  during  the  period  referred  to,  the  advance 
in  average  wages  in  Paris  was  fifty-three  per  cent  and  in  the 
provinces  sixty-eight  per  cent,  the  figures  being  applicable 
to  1,497,000  workmen  out  of  a  total  of  1,554,000  ascertained 
to  be  occupied  in  these  industries  by  the  French  census  of 
1876.*  More  recent  returns  show  that  for  the  whole  of 
France,  exclusive  of  Paris,  the  increase  of  wages  from  1853 
to  1884,  "  pour  la  petite  Industrie,"  was  about  sixty-six  per 
cent. 

Accepting  the  wage  statistics  of  France  (and  they  are 
official),  it  would,  therefore,  appear  that  the  rise  of  wages 
in  that  country  during  the  years  above  reviewed  was  greater 
than  was  experienced  in  either  England  or  the  United 
States. 

M.  Yves  Guyot,  the  eminent  French  economist,  is  also 
the  authority  for  the  statement  that  the  average  daily  wages 
of  work-women  in  France  engaged  in  the  manufacture  of 
clothing,  lace,  embroideries,  laundry-work,  and  the  like, 
increased  ninety-four  per  cent  between  the  years  1844  and 

*  "  On  the  Comparative  Efficiency  and  Earnings  of  Labor  at  Home  and 
Abroad,"  by  J.  S.  Jeans,  "Journal  of  the  Royal  Statistical  Society  "  (G.  B.), 
December,  1884. 


CHANGES  IN  COST  OF  LIVING. 

1872.  In  both  France  and  England  there  has  been  in 
recent  years  a  very  marked  tendency  in  men  to  abandon 
trades  in  which  they  formerly  competed  with  women,  be- 
cause better  channels  have  been  opened  to  the  women  for 
their  activities,  and  consequently  the  demand  for  women's 
labor  has  become  more  and  more  considerable. 

In  the  cotton-mills  at  Miilhausen,  Germany,  the  rates  of 
increase  in  wages  between  1835  and  1880  range  between 
sixty  and  two  hundred  and  fifty-six  per  cent,  the  increase 
in  the  later  years,  as  in  other  countries,  having  been  par- 
ticularly noticeable.  M.  Charles  Grad,  a  French  economist, 
has  called  attention  to  the  fact  that  in  the  textile  and  metal- 
lurgic  industries  of  France  it  is  the  lowest  class  of  workmen 
whose  wages  have  risen  most  in  the  last  fifty  years. 

One  factor  which  has  undoubtedly  contributed  some- 
what to  the  almost  universal  rise  of  wages  during  the  last 
quarter  of  the  century  has  been  the  immense  progress  that 
has  been  made  in  the  abolition  of  human  slavery — direct,  as 
well  as  in  its  modified  forms  of  serfdom  and  peonage — 
which  thirty  years  ago  existed  unimpaired  over  110  incon- 
siderable areas  of  the  earth's  surface,  and  exerted  a  powerful 
influence  for  the  degradation  of  labor  and  reduction  of  av- 
erage wages  to  a  minimum. 

RELATION  OF  WAGES  TO  THE  COST  OF  LIVING. — All 
conclusions  as  to  the  effect  of  changes  in  the  rates  of  wages 
in  any  country  are,  however,  incomplete,  unless  accompanied 
by  data  which  permit  of  a  conversion  of  wages  into  living ; 
for,  even  the  places  where  an  advance  in  money- wages  can  not 
be  found  (if  there  are  any  such),  the  decline  in  recent  years 
in  the  price  of  commodities  is  equivalent  to  an  advance  in 
wages.  In  the  case  of  the  United  States,  and  for  the  period 
from  1860  to  1885,  such  data  have  been  furnished  by  Mr. 
William  M.  Grosvenor,  through  a  careful  tabulation  of  the 
prices  of  two  hundred  commodities,  embracing  nearly  every 
commodity  in  common  use.  From  these  comparisons,  that 
have  thus  been  made  available,  it  appears  that,  if  the  pur- 


412  RECENT  ECONOMIC  CHANGES. 

chasing  power  of  one  dollar  in  gold  coin  in  May,  1860,  be 
taken  as  the  standard — or  as  one  hundred  cents'  worth — the 
f  corresponding  purchasing  power  of  a  like  dollar  in  the  year 
,  1885  was.26j44  times  greater.  The  artisan  in  Massachusetts 
in  this  latter  year,  therefore,  could  either  "have  largely 
raised  the  standard  of  his  living,  or,  on  the  same  standard, 
could  have  saved  one  fourth  of  his  wages."  Similar  investi- 
gations instituted  in  Great  Britain  (and  which  had  been 
before  made)  indicate  corresponding  results. 

Another  conclusion  by  Mr.  Atkinson  would  also  seem  to 
be  incapable  of  contravention,  namely :  That  the  greatly 
increased  product  of  the  fields,  forests,  factories,  and  mines 
of  the  United  States  which  has  occurred  during  the  period 
from  1860  to  1885  "  must  have  been  mostly  consumed  by 
those  who  performed  the  actual  work,  because  they  consti- 
tute so  large  a  proportion — substantially  about  ninety  per 
cent — of  the  whole  number  of  persons  by  whom  such  prod- 
ucts are  consumed,"  and  that  "  no  other  evidence  is  needed 
to  prove  that  the  working  man  and  woman  of  the  United 
States,  in  the  strictest  meaning  of  these  words,  are,  decade 
by  decade,  securing  to  their  own  use  and  enjoyment  an  in- 
creasing share  in  a  steadily  increasing  product."  * 

The  report  of  the  Bureau  of  Industrial  Statistics  of  the 
State  of  Maine,  for  the  year  1887,  also  present  some  notable 
evidence  of  the  continued  increase  in  the  purchasing  power  of 
wages,  and  show  that,  taking  the  experience  of  a  typical 
American  family  in  that  State,  deriving  their  living  from 
manufacturing  employments  as  a  basis,  as  much  of  food 
could  be  bought  in  1887  for  one  dollar  as  would  have  cost 
$1.20  in  1882  and  $1.30  in  1877 ;  the  difference  being  mainly 
due  to  reductions  in  the  prices  of  flour,  sugar,  molasses,  fresh 
meats,  lard,  oil,  and  soap. 

In  a  paper  presented  to  the  British  Association  in  1886 
by  Mr.  M.  Gr.  Mulhall,  the  increase  in  the  purchasing  power 

*  "  Century  Magazine,"  1887. 


PURCHASING  POWER  OP  MONEY.  413 

of  money  as  respects  commodities,  and  its  decrease  in  pur- 
chasing power  as  respects  labor  in  England  during  the  pe- 
riod from  1880-'83  as  compared  with  the  period  from  1821 
to  1848,  was  thus  illustrated  by  being  reduced  to  figures  and 
quantities:  Thus  in  1880-'83,  117  units  of  money  would 
have  bought  as  much  of  grain  as  142  units  could  have  done 
in  1821-'48  ;  but,  in  respect  to  labor,  it  would  have  required 
285  units  of  money  to  have  bought  as  much  in  1820-'23  as 
201  units  did  in  1821-'48.  In  respect  to  cattle,  the  pur- 
chasing power  of  money  had  increased  in  the  ratio  of  312 
in  the  latter  to  218  in  the  former  period ;  but  since  1879 
the  carcass  price  of  dressed  meats  has  notably  declined 
in  England :  inferior  beef  upon  the  London  market  (in 
1885-'86)  to  the  extent  of  forty-three  per  cent ;  prime 
beef,  eighteen  per  cent ;  pork,  twenty-two  per  cent ;  mid- 
dling mutton,  twenty-seven  per  cent.  It  is  also  undoubt- 
edly true,  as  Mr.  John  Bright  some  years  since  pointed 
out,*  that  meat,  in  common  with  milk  and  butter,  com- 
mands comparatively  high  prices  in  England,  "because 
our  people,  by  thousands  of  families,  now  eat  meat  who 
formerly  rarely  tasted  it,  and  because  our  imports  of  these 
articles  are  not  sufficient  to  keep  prices  at  a  more  moder- 
ate rate." 

One  point  of  interest  pertinent  to  this  discussion,  which 
has  for  some  time  attracted  the  attention  of  students  of  so- 
cial science  in  England  and  France,  has  also  been  made  a 
matter  of  comment  in  the  cities  of  the  Northwestern  United 
States,  especially  in  St.  Paul  and  Minneapolis,  and  is  proba- 
bly applicable  to  all  other  sections  of  the  country ;  and  that 
is,  that  expenditures  for  rent  form  at  present  a  much  larger 
item  in  the  living  expenses  of  families  than  ever  before,  and 
for  the  reason  that  people  are  no  longer  content  to  live  in 
the  same  classes  of  houses  as  formerly ;  but  demand  houses 
with  all  the  so-called  modern  improvements — gas  and  water 

*  Letter  to  the  London  "  Times,"  November,  1884. 


414:  RECENT  ECONOMIC  CHANGES. 

and  better  warming,  ventilating,  and  sanitary  arrangements 
— which  must  be  paid  for. 

One  of  the  most  striking  illustrations  or  rather  demon- 
strations of  the  improvement  of  the  condition  of  the  masses 
in  respect  to  subsistence  is  afforded  by  a  comparison  of  the 
statistics  of  pauperism  in  London  for  the  years  1815  and 
1875.  In  the  former  year  the  number  of  paupers  in  London 
was  about  100,000.  In  1875,  although  the  population  of 
the  city  in  the  intervening  period  had  increased  threefold, 
the  number  of  paupers  was  smaller ;  but  the  cost  of  main- 
taining 100,000  paupers  in  London  in  1875  was  five  times 
what  it  was  in  1815.  At  the  same  time  the  cost  of  almost 
all  the  essentials  for  a  simple  livelihood — bread,  sugar,  tea, 
fuel,  and  clothing — were  much  cheaper  in  1875  than  in  1815, 
and  numerous  small  comforts  and  conveniences  which  ma- 
terially smooth  and  civilize  life,  and  which  sixty  years  ago 
were  not  obtainable  by  the  working-classes,  can  now  be  pro- 
cured at  a  trifling  cost.  The  pauper,  furthermore,  does 
not  fix  for  himself  the  style  of  his  living,  but  it  is  fixed  for 
him  by  others ;  "  and  the  common  rule  is,  that  he  shall  not 
live  materially  better,  nor  much  worse,  than  he  would  do  if 
he  worked  for  his  living,  as  a  laborer  of  the  lowest  class." 
An  examination  of  the  accounts  furnishes,  however,  an  ex- 
planation of  this  curious  societary  phenomenon.  Thus,  "  the 
ideas  of  what  is  absolutely  or  primarily  necessary  for  the 
decent  maintenance  of  paupers  have  risen  in  recent  years. 
The  laborers  have  reached  a  much  higher  standard  of  exist- 
ence. A  much  more  elevated  minimum  of  wages  has  been 
secured.  Their  numbers  have  greatly  increased,  but  their 
welfare  has  grown  in  a  much  higher  ratio."  And  through 
the  agencies  which  have  effected  these  results  the  very  low- 
est stratum  of  society  has  been  gradually  and  without  any 
direct  effort  lifted  to  higher  and  better  conditions — a  fact, 
from  a  social  and  humanitarian  point  of  view,  of  the  great- 
est importance. 

REDUCTION  IN  THE  HOURS  OF  LABOR. — Concurrently 


REDUCTION  IN  HOURS  OF  LABOR.  415 

with  the  general  increase  in  recent  years  in  the  amount  and 
purchasing  power  of  money-wages  throughout  the  civilized 
world,  the  hours  of  labor  have  also  generally  diminished. 
In  the  case  of  Great  Britain  Mr.  Giffen  is  of  the  opinion 
that  the  reduction  during  the  last  fifty  years  in  the  textile, 
house-building,  and  engineering  trades  has  been  at  least 
twenty  per  cent,  and  that  the  British  workman  now  gets 
from  fifty  to  one  hundred  per  cent  more  money  for  twenty 
per  cent  less  work. 

In  the  United  States,  the  data  afforded  by  the  census 
returns  of  1880  indicate  that  in  1830  81*1  per  cent  of  the 
recipients  of  regular  wages  worked  in  "excess  of  ten  hours 
per  day ;  for  1880,  the  number  so  working  was  about  26-5 
per  cent.  In  1830,  13'5  per  cent  worked  in  excess  of  thir- 
teen hours.  In  1880  this  ratio  had  been  reduced  to  2-5. 
For  the  entire  country  the  most  common  number  of  hours 
constituting  a  day's  labor  in  1880  was  ten. 

For  Germany,  the  reports  are  much  less  favorable.  In 
Bavaria,  according  to  the  German  factory  reports  for  1886, 
the  hours  of  labor  in  24-4  per  cent  of  all  industries  ranged 
from  eleven  hours  and  a  quarter  to  sixteen  hours  daily ;  in 
56-6  per  cent  from  ten  to  eleven  hours,  and  for  the  remainder 
from  eleven  hours  down  to  five.  The  extremely  short  limit 
was,  however,  reached  only  in  the  exceedingly  dangerous 
and  almost  fatal  trade  of  quicksilvering  the  backs  of  looking- 
glasses.  In  breweries  the  hours  of  labor  seem  to  be  the 
longest,  being  never  less  and  often  more  than  sixteen  hours. 

In  Prussia,  recent  official  investigations  show  that  in  a 
very  large  proportion — more  than  one  half — of  the  factories, 
and  establishments  for  trade  and  transportation  in  the  king- 
dom, there  is  no  cessation  of  labor  on  Sunday.*  In  Russia, 

*  The  results  of  an  investigation  recently  instituted  by  the  Prussian  Gov- 
ernment in  consequence  of  a  demand  made  for  an  absolute  prohibition  of  Sun- 
day labor  in  business  occupations  in  that  country,  have  revealed  a  curious  and 
apparently  an  unexpected  condition  of  public  sentiment  on  the  subject:  Thus 
from  returns  obtained  from  thirty  out  of  thirty-five  provinces  or  departments, 


416  RECENT  ECONOMIC  CHANGES. 

an  average  of  twelve  hours  daily  is  reported  as  the  normal 
working  hours  of  most  industrial  establishments. 

That  the  conclusions  of  Mr.  Giffen  respecting  the  gen- 
eral effect  in  Great  Britain  of  the  increase  in  wages  and 
reduction  in  the  hours  of  labor,  as  above  stated,  find  a  cor- 
respondence in  the  United  States,  might,  if  space  permitted, 
be  shown  by  a  great  amount  and  variety  of  testimony.  A 
single  example — drawn  from  the  experience  of  the  lowest 
class  of  labor — is,  however,  especially  worthy  of  record.  In 
1860,  before  the  war,  the  average  amount  of  work  expected 
of  spade-laborers  on  the  western  divisions  of  the  Erie  Canal, 
in  the  State  of  New  York,  was  five  cubic  yards  of  earth  ex- 
cavation for  each  man  per  day ;  and  for  this  work  the  aver- 
age wages  were  seventy-five  cents  per  day.  At  the  present 
time  the  average  daily  excavation  of  each  man  employed  on 
precisely  the  same  kind  of  work,  and  on  the  same  canal,  is 
reported  as  three  and  a  half  cubic  yards,  at  a  compensation 
of  from  $1.50  to  $2  per  day. 

Any  review  of  the  recent  experiences,  in  respect  to  wages 

containing  500,156  manufacturing  establishments  and  1,582,591  workmen,  it 
was  found  that  57 '75  per  cent  of  the  factories  kept  at  work  on  Sunday.  On 
the  other  hand,  the  larger  number  of  the  workmen,  or  919,564,  rested  on  Sun- 
day. As  regards  trade  and  transportation,  it  was  found  that  in  twenty-nine 
provinces  (out  of  thirty -five),  of  147,318  establishments  of  one  sort  or  another, 
employing  245,061  persons,  seventy-seven  per  cent  were  open  on  Sunday,  and 
fifty-seven  per  cent  of  the  employe's  worked  on  that  day.  A  canvass  of  the 
persons  naturally  most  interested  in  the  matter — i.  o.,  the  workmen — showed, 
however,  that  only  a  comparatively  small  number  were  in  favor  of  the  pro- 
posed measure.  Thus,  for  example,  of  those  who  were  consulted  iu  the  great 
factories  or  stores,  only  thirteen  per  cent  of  the  employers  and  eighteen  per 
cent  of  the  employed  were  in  favor  of  total  prohibition.  In  the  smaller  indus- 
tries the  proportion  was  eighteen  per  cent  of  the  employers  and  twenty-one 
per  cent  of  the  employed.  In  trade  only  forty-one  per  cent  of  the  employers 
and  thirty-nine  per  cent  of  the  employed,  and  in  transportation  only  twelve 
per  cent  of  the  employers  and  sixteen  per  cent  of  the  employed,  were  in  favor 
of  total  prohibition.  (See  also  page  269.) 

A  "factory  bill,"  introduced  as  a  government  measure  in  the  French 
Chamber  of  Deputies,  in  1888,  contained  the  curious  provision  that  one  day 
of  rest  should  be  given  weekly  to  all  operatives ;  but  that  the  choice  of  the 
day  should  be  left  discretionary  with  the  employers. 


WAGES  AND  COMMODITY  PRICES.  417 

and  hours  of  labor,  would  be  imperfect  that  failed  to  call 
attention  to  the  fact  that  the  benefits  from  advances  in  the 
one  case,  and  reductions  in  the  other,  have  accrued  mainly 
to  operatives  in  factories  and  to  artisans  and  skilled  me- 
chanics, and  have  been  enjoyed  in  the  least  degree,  and 
largely  not  at  all,  by  employes,  clerks,  book-keepers,  copy- 
ists, etc.,  engaged  in  mercantile  and  commercial  operations 
and  establishments.  The  reason  of  this  is  manifestly,  that 
the  supply  of  this  latter  class  of  labor  has  been  dispropor- 
tionately greater  than  that  of  the  former,  and  continually 
tends  to  be  in  excess  of  demand ;  and  under  such  circum- 
stances, although  the  amount  of  discontent  may  be,  and  un- 
doubtedly is,  very  great  and  well  warranted,  the  organized 
and  aggressive  expression  of  it  finds 'little  sympathy  on  the 
part  of  the  public. 

The  question  has  been  asked,  Why  is  it  that  wages  of 
manual  labor  have  been  constantly  rising  in  recent  years, 
while  all  other  prices  have  been  concurrently  falling  ?  or,  to 
put  it  differently,  why  is  it  that  over-production,  while  cheap- 
ening the  product,  should  not  also  cheapen  the  work  that 
produces  it  ?  The  answer  is,  that  the  price  of  the  products 
of  labor  is  not  governed  by  the  price  of  labor,  or  wages,  but 
that  wages,  or  earnings,  are  results  of  production,  and  not 
conditions  precedent.  Wages,  as  a  rule,  are  paid  out  of 
product.  If  production  is  small,  no  employer  can  afford  to 
pay  high  wages ;  but  if,  on  the  contrary,  it  is  large,  and 
measured  in  terms  of  labor  is  of  low  cost — which  conditions 
are  eminently  characteristic  of  the  modern  methods  of  pro- 
duction—  the  employer  is  not  only  enabled  to  pay  high 
wages,  but  will,  in  fact,  be  obliged  to  do  so,  in  order  to  ob- 
tain what  is  really  the  cheapest  (in  the  sense  of  the  most 
efficient)  labor.  The  world  has  not  yet  come  to  recognize 
it,  but  it  is  nevertheless  an  economic  axiom,  that  the  invari- 
able concomitant  of  high  wages  and  the  skilled  use  of  ma- 
chinery is  a  low  cost  of  production  and  a  large  consumption. 
In  the  first  of  the  results  is  to  be  found  the  explanation  for 


418  RECENT  ECONOMIC  CHANGES. 

the  continually  increasing  tendency  of  wages  to  advance; 
in  the  second,  an  explanation  why  the  supplantation  of 
labor  by  machinery  has  not  been  generally  more  disastrous. 
If,  however,  it  be  rejoined  that  "  the  comparative  poverty  of 
cotton-  and  woolen-mill  operatives,  and  of  women  who  run 
sewing-machines,"  and  the  like,  does  not  sustain  the  above 
explanations,  the  question  is  pertinent,  Comparative  with 
what  ?  For  low  and  insufficient  as  may  be  the  wages  of  all 
this  class  of  operatives,  they  were  never,  in  comparison  with 
other  times,  so  high  as  at  present.* 

IMPAIRMENT  OF  THE  VALUE  OF  CAPITAL  EELATIVELY 
TO  LABOR. — While  the  remuneration  of  labor  has  enor- 
mously increased  during  recent  years,  the  return  to  capital 
has  not  been  in  any  way  proportionate,  and  is  apparently 
growing  smaller  and  smaller.  For  this  economic  phenom- 
enon there  can  be  but  one  general  explanation ;  and  that  is, 
that  regarding  labor  and  capital  as  commodities,  or  better, 
as  instrumentalities  employed  in  the  work  of  production 
and  distribution,  capital  has  become  relatively  more  abun- 
dant than  labor,  and  has  accumulated  faster  than  it  can  be 
profitably  invested ;  and,  in  accordance  with  the  law  of  sup- 

*  The  not  infrequent  assertion  that  "  the  rich  are  growing  richer  and  the 
poor  poorer,"  and  that  the  rewards  of  labor  are  growing  less,  has  been  thus 
recently  answered,  as  far  as  the  labor  of  machinists  in  the  United  States  are 
concerned,  by  James  Bartlett,  a  Massachusetts  machinist,  in  a  recent  public 
address.  Speaking  from  his  own  memory  of  the  condition  of  things  in  1842, 
he  said : 

"  The  wages  of  a  machinist  in  shop  were  $1  to  $1.25  a  day ;  one  nabob  of 
a  pattern-maker  received  the  great  sum  of  $1.50.  They  went  to  work  at  five 
o'clock  in  the  morning,  and  worked  till  7.30  at  night,  with  an  hour  for  break- 
fast and  three  quarters  for  dinner.  It  was  several  years  before  we  obtained 
eleven  hours  a  day.  It  has  now  been  ten  hours  a  day  for  twenty -five  years  or 
more,  and  we  grumble  at  that,  though  we  get  more  than  twice  the  wages  we 
did  forty  years  ago ;  and  we  are  hoping  to  get  the  same  or  higher  pay  for 
working  eight  hours.  I  know  the  condition  of  the  machinist  is  better  than 
it  was  when  I  first  joined  the  guild  ;  he  has  better  pay,  better  houses,  better 
education,  better  living.  For  my  part,  I  don't  want  any  more  of  the  good  old 
times.  The  present  time  is  the  best  we  have  ever  had,  though  I  hope  not  the 
best  we  shall  ever  see." 


IMPAIRMENT  IN  THE  VALUE  OP  CAPITAL.      419 

ply  and  demand,  the  compensation  for  its  use — interest  or 
profits — has  necessarily  declined  as  compared  with  the  com- 
pensation paid  for  labor. 

The  position  taken  by  some  investigators  and  writers  of 
ability  is,  that  the  great  decline  in  the  value  of  capital — by 
reason  of  an  impairment  of  the  ability  of  its  owners,  i.  e., 
through  loss  of  dividends  on  investments  and  of  profits  in 
business,  to  purchase  and  consume  the  products  of  labor, 
and  a  diversion  of  capital,  from  lack  of  remunerative  income- 
yielding  investments,  into  enterprises  not  needed  and  so 
occasioning  over-production — has  been  a  prime  and  perhaps 
the  main  cause  of  all  the  economic  disturbances  in  recent 
years.  That  such  a  factor,  in  common  with  many  others, 
has  been  instrumental  in  occasioning  serious  disturbances, 
may  not  be  questioned ;  but  that  its  influence  has  not  been 
in  any  sense  primary  would  seem  evident,  when  it  is  con- 
sidered that  the  reason  why  capital  has  increased  and  cheap- 
ened in  these  latter  years  is,  that  mankind,  through  a  larger 
knowledge  and  better  use  of  the  forces  of  Nature,  has  been 
enabled  to  produce,  and  actually  has  produced,  a  far  greater 
abundance  of  almost  all  material  things  (or,  in  other  words, 
a  greater  abundance  of  capital)  with  the  same  effort  than 
at  any  former  period  of  its  history.  Capital,  at  the  outset, 
greatly  contributed  to  such  a  development,  or,  like  the 
wizard  in  the  Eastern  fable,  it  pronounced  the  incantation 
which  set  the  natural  forces  at  work ;  but  the  wonderful  in- 
crease and  consequent  impairment  in  the  value  of  capital 
was  an  after-result,  something  not  anticipated,  and  the  con- 
tinued progress  of  which  the  owners  of  capital,  like  the 
enchanter,  now  find  themselves  powerless  to  check.  The 
saving  in  the  cost  of  the  freight  moved  on  the  railroads  of 
every  country,  comparing  1887  with  1850,  and  assuming  like 
quantities  to  have  been  transported  at  the  different  periods, 
would  represent  every  year  more  than  the  original  cost  of 
the  railroads  and  their  equipment. 

One  efficient  cause  of  this  greater  abundance  of  capital 


420  EECENT  ECONOMIC  CHANGES. 

is,  that  every  new  invention  or  discovery  produces  always  as 
much  as,  and  often  a  much  greater  amount,  of  product  on  a 
less  amount  of  capital  than  was  previously  invested.  The 
result  of  material  progress  is,  therefore,  to  both  supplement 
the  need  or  economize  the  use  of  capital,  and  at  the  same 
time  increase  it.  For  example,  a  first-class  iron  freighting 
screw-steamer  cost  in  Great  Britain,  in  1872-'74,  $87.48 
(£18)  per  ton.  In  1887  a  better  steamer,  constructed  of 
steel,  fitted  with  triple  compound  engines,  with  largely  in- 
creased carrying  capacity,  and  consequent  earning  power, 
and  capable  of  being  worked  at  much  less  expense,  could 
have  been  contracted  for  $34  (£7)  per  ton.  How  rapidly 
capital  has  accumulated  in  recent  years  under  the  new  con- 
ditions of  production  is  indicated  by  the  circumstance  that, 
although  most  of  the  great  loans  which  have  been  negotiated 
within  the  last  twenty-five  years  have  been  for  the  replace- 
ment of  capital  unproductively  used  up,  or  absolutely  de- 
stroyed in  war  or  military  operations,  and  notwithstanding 
the  immense  amount  of  capital  that  has  also  been  destroyed 
during  the  same  period  by  the  replacement  of  machinery 
contingent  on  new  inventions,  the  vacuum  thus  created  has 
not  only  been  promptly  filled,  but  the  competition  for  the 
privilege  of  furnishing  further  supplies  of  capital  for  similar 
purposes  was  never  greater. 

Again,  as  capital  increases  and  competition  between  its 
owners  for  its  profitable  investment  becomes  more  intense, 
and  as  modern  methods  can  bring  all  the  unemployed  capital 
of  the  world  within  a  few  hours  of  the  world's  great  centers 
for  financial  supply,  the  rate  of  profit,  or  interest  to  be  ob- 
tained by  the  investor  or  lender,  from  this  cause,  also  neces- 
sarily tends  to  shrink  toward  a  minimum.  Such  a  minimum 
will  be  reached  when  the  returns  for  the  use  of  capital  be- 
come insufficient  to  induce  individuals  to  save  it,  especially 
in  the  form  of  its  representative,  money,  and  thus  add  to 
the  available  reserves  by  which  expanding  industries  can  be 
supported.  And  to  such  a  minimum  the  financial  world 


DECLINE  IN  RATES  OF  INTEREST.  421 

seems  to  be  always  moving  by  the  force  of  laws  which  no 
combination  of  capitalists  can  resist. 

To  those  who  are  the  possessors  of  large  properties,  a 
gradually  diminishing  rate  of  return  for  the  use  of  capital 
makes  but  little  difference  so  far  as  personal  comforts  are 
concerned ;  but  to  the  small  capitalists  the  steady  reduction 
in  income  which  has  been  experienced  in  recent  years  means 
always  discomfort,  and  often  misery.  A  striking  illustration 
of  this,  derived  from  actual  experience,  and  contingent  on  a 
reduction  by  the  Prussian  Government  of  the  interest  on 
its  debt  to  three  and  a  half  and  three  per  cent,  is  thus  given 
by  a  recent  correspondent  (1887)  of  the  London  "  Econo- 
mist " : 

"  This  reduction,"  he  says,  "  struck  a  heavy  blow  at  the  existence 
of  what  may  be  called  the  '  middle  classes '  in  Germany — that  is,  the 
great  number  of  people  who  own  a  small  capital  invested  in  funds, 
besides  carrying  on  some  business  or  having  some  other  profession. 
The  combined  income  from  both  enabled  them  to  live  in  fair  style, 
making  both  ends  meet  by  way  of  carefully  regulated  expenditure. 
These  classes  have  formed  for  over  half  a  century  the  '  back-bone '  of 
Germany.  They  are  now  gradually  disappearing,  making  room  for 
great  wealth  on  one  side  and  great  poverty  on  the  other." 

The  following  are  other  illustrations  to  the  same  effect, 
derived  from  the  recent  experience  of  the  United  States :  In 
1877  the  average  rate  of  interest  received  by  the  Massachu- 
setts savings-banks  was  6'8  per  cent.,  but  from  that  rate  it 
has  descended  by  an  almost  regular  progression  to  4-8  per 
cent  in  1887.  In  1877  these  institutions  had  $55,881,882 
loaned  at  seven  per  cent,  $48,387,908  loaned' at  six  per  cent, 
$13,758,476  loaned  at  five  per  cent,  and  $2,905,000  loaned 
at  four  per  cent.  In  1887  the  amount  of  seven-per-cent 
loans  was  $1,717,827,  six-per-cent  loans  $38,277,441,  five-per- 
cent loans  $77,474,331,  four-per-cent  loans  $16,091,983. 
Such  a  shrinkage  of  interest  obviously  represents  an  enor- 
mous reduction  in  the  income  of  the  depositors. 

The  average  interest  paid  on  the  aggregate  funded  debts 

19 


422  RECENT  ECONOMIC  CHANGES. 

of  railroads  of  the  United  States  for  the  year  1886  was  only 
4'77  per  cent,  while  the  percentage  of  dividends  on  their 
whole  share  capital  was  only  2 '04  per  cent. 

An  investigation  in  1887  by  the  Bureau  of  Labor  Statis- 
tics of  Connecticut  into  the  details  of  business  establish- 
ments in  that  State,  having  a  capital  of  $48,665,000,  employ- 
ing 28,256  hands,  and  covering  twenty-two  distinct  lines  of 
industry,  showed  the  aggregate  profit  over  and  above  all 
expenditures,  on  an  annual  production  of  $45,500,000,  to 
have  been  $2,800,000,  or  6*15  per  cent.  In  certain  classes 
of  manufactures — as  bakeries,  forging,  knit  goods,  and 
corset-making — the  profits  were  much  larger;  but  on  the 
great  industries  of  woolen,  general  hardware,  and  cotton- 
duck  manufacturing,  the  profits  of  the  year  were  less  than 
three  per  cent  on  the  capital  invested.* 


/ 
f* 


Those  not  familiar  with  financial  experiences  can  hardly  realize  the  great 
ecline  within  the  last  few  years  in  the  price  and  profits  of  capital.  Thus,  the 
average  rate  of  interest  in  the  cities  of  Boston,  New  York,  Philadelphia,  Cin- 
cinnati, St.  Louis,  and  Chicago,  as  computed  from  the  record  of  public  trans- 
actions, from  1844  to  1858,  was  10 -j>  per  cent.  In  1871  the  London  "  Econo- 
mist" estimated  that  the  average  rate  of  interest  on  a  majority  of  the  foreign 
and  colonial  stocks  and  bonds  at  that  time  held  in  Great  Britain,  amounting 
to  not  less  than  twenty -eight  hundred  and  fifty  million  dollars,  was  equal  to 
six  or  seven  per  cent  as  a  minimum.  Up  to  1871  the  United  States  had  not 
been  able  to  sell  any  portion  of  its  funded  debt,  bearing  six  per  cent  gold 
interest  in  European  markets,  on  terms  as  favorable  as  par  in  gold,  United 
States  five-twenty  6s  being  quoted  on  the  London  market  in  1870  as  low  as 
87%.  The  following  is  a  transcript  of  the  prices  of  various  securities  as  quoted 
on  the  London  market  in  1871 :  German  Confederation  obligations,  five  per 
cents,  87 ;  French  national  defense  6s,  87 ;  Massachusetts  5s,  91 ;  Georgia  7s, 
78 ;  Spanish  five  per  cents,  secured  by  a  mortgage  on  the  celebrated  quick- 
silver-mines of  New  Almaden,  in  addition  to  the  faith  of  the  Government,  76 
and  77  ;  Italian  six  per  cents,  secured  by  a  pledge  of  the  state  revenues  from 
tobacco,  87M  i  Japanese  nine  per  cents,  89 ;  Panama  Railroad  seven  per  cent 
general  mortgage,  93 ;  Michigan  Central  Eailroad,  first-mortgage  sinking-fund, 
eight  per  cent,  85 ;  Pennsylvania  Eailroad  six  per  cent  general  mortgage 
(sterling),  91.  To-day  the  Governments  of  Great  Britain  and  the  United 
States  can  readily  borrow  money  at  2%  per  cent ;  all  first-class  railroad  cor- 
porations at  four  per  cent ;  while  millions  of  money  have  been  loaned  in  recent 
years  on  real-estate  security  in  the  United  States  for  four  per  cent,  and  in 
Great  Britain  for  three  per  cent.  In  Germany  the  market  rate  of  discount  for 


DECLINE  IN  LAND  VALUES. 


423 


DECLINE  IN  LAND-VALUES. — Another  interesting  and 
curious  feature  of  the  existing  economic  condition — the 
direct  outcome  of  the  recent  radical  changes  in  the  meth- 
ods of  production  and  distribution — has  been  the  decline  in 
the  value  of  land  over  large  areas  of  the  earth's  surface. 

Thus,  in  the  case  of  Great  Britain,  while  every  other 
item  of  national  wealth  has  shown  an  increase — often  most 
extraordinary — since  1840,  the  estimated  value  of  land  in 
the  United  Kingdom  since  that  date,  notwithstanding  a 
large  increase  in  population,  has  heavily  decreased.*  For- 
merly Paris  obtained  its  fruit  and  vegetable  supply  entirely 
from  lands  in  its  own  neighborhood ;  and  the  difference  in 
the  cost  of  transportation  gave  such  lands  a  marked  advan- 
tage over  more  distant  places.  But  now  the  railways  bring 

a  considerable  period  in  1887  was  as  low  as  from  1%  to  1%  per  cent.  Not 
many  years  ago  the  customary  rate  of  interest  allowed  by  the  savings-banks 
and  trust  companies  of  the  United  States  was  six  per  cent ;  now  the  former 
for  the  most  part  pay  but  four,  and  the  trust  companies  but  two  to  three  per 
cent.  British  consols  in  November,  1887,  paid  to  the  investor  215/u  per  cent, 
while  of  the  best  (debenture)  railroad  stocks  of  Great  Britain  none  now  return 
as  much  as  four  per  cent  on  their  current  market  prices.  The  dividends  of 
the  Imperial  (Eeichbank)  Bank  of  Germany,  in  the  four  years  from  1883  to 
1886  inclusive,  declined  0'96  per  cent,  and  the  average  of  the  private  banks  of 
Germany  during  the  same  period,  1-60  per  cent ;  all  of  which  clearly  indicates 
that  the  banking  business  of  Germany  is  becoming  less  and  less  profitable. 

*  According  to  Mr.  Mulhall,  the  English  statistician,  the  following  table 
exhibits  the  changes  in  the  leading  items  of  wealth  in  Great  Britain  since 
1840: 

[Omitting  6  ciphers.] 


1840. 

1860. 

1887. 

Railways  

£21 

£343 

£831 

Houses  

770 

1  164 

2  640 

Furniture  

885 

582 

l'320 

Lands  

1,080 

1  840 

1  542 

Cattle,  etc  .    .. 

380 

460 

414 

Sltipiiin'   .... 

23 

44 

130 

Merchandise  

70 

190 

821 

Bullion  

61 

105 

148 

Sundries  v  

710 

827 

1  869 

Total       

£4,100 

£5,560 

£9  210 

424:  RECENT  ECONOMIC  CHANGES. 

the  same  commodities  from  very  distant  places  for  the  same 
or  a  less  price,  and  the  value  of  land  in  the  environs  of  Paris 
has  naturally  declined.  Fresh  grapes  are  even  now  brought 
in  large  quantities,  in  casks  or  baskets,  from  Algeria — the 
climate  of  which  favors  the  growth  of  the  produce  of  the 
vine,  but  is  not  favorable  to  wine-making — to  the  cooler 
regions  of  central  and  eastern  France,  where  they  are  manu- 
factured into  wine.  In  certain  of  the  departments  of  France 
the  peasant  proprietors  of  land  have  ceased  to  buy  land  and 
are  anxious  to  sell  it ;  and  in  some  instances  large  tracts 
have  been  practically  abandoned  because  the  sale  of  the 
products  of  the  soil,  under  the  competition  to  which  they 
are  exposed  by  reason  of  new  conditions,  does  not  return 
the  expenses  of  their  cultivation.  In  Austria  and  Germany 
the  competitive  supply  of  agricultural  produce  from  the 
United  States  has  been  so  influential,  that  it  is  claimed  that 
if  the  state  should  wholly  discontinue  its  encouragement  of 
the  beet-root  sugar-industry  by  bounties,  immense  tracts  of 
land  would  become  comparatively  valueless. 

In  Portugal,  the  owners  and  cultivators  of  the  soil  seem 
to  be  in  a  remarkably  unfortunate  condition.  The  Portu- 
guese farmer,  despite  heavy  protective  duties,  finds  himself 
unable  to  successfully  contend  against  the  increased  import 
of  cereals,  mainly  from  the  United  States.  The  industry 
in  olive-oil,  formerly  flourishing,  is  languishing,  through  the 
alleged  extensive  use  of  American  cotton-seed  oil  as  a  sub- 
stitute ;  while  the  demand  for  Portuguese  wines,  which  for 
a  time  was  increased  by  the  bad  vintages  of  France,  is  being 
impaired,  and  possibly  threatened  with  destruction,  by  the 
continually  increasing  supply  in  the  French  markets  of 
cheaper  and  more  suitable  wines  for  mixing  purposes  from 
California,  the  Cape  of  Good  Hope,  and  Australia.  In  the 
Canary  Islands,  where  the  soil  is  most  cheap  and  fertile, 
and  the  vegetation  of  both  the  tropic  and  temperate  zones 
flourishes  in  great  luxuriance,  the  land  question  has  also  be- 
come of  as  much  importance  and  embarrassment  as  in  less 


LAND  VALUES  IN  THE  UNITED  STATES.        425 

favored  countries.  The  former  great  remunerative  indus- 
try of  these  islands  was  wine,  "  canary  " ;  but  this,  by  the  im- 
pairment of  the  vines,  has  become  of  little  account.  These 
islands  also  formerly  constituted  a  large  source  of  supply  to 
the  world  of  cochineal,  for  the  production  of  which  they 
have  special  advantages ;  but  since  the  discovery  and  use  of 
the  aniline  dyes,  this  industry  has  been  almost  destroyed. 
Curiously,  also,  a  comparatively  extensive  export  of  potatoes 
from  the  islands  to  the  Spanish  West  Indies  is  diminishing 
through  a  competitive  exportation  of  the  same  vegetable 
from  the  United  States.  So  that  there  seems  to  be  nothing 
left  for  the  land  proprietors  and  cultivators  in  this  locality 
to  do,  except  to  resort  to  the  method,  so  much  in  favor  at 
the  present  time,  of  mutually  taxing  each  other  for  their 
mutual  benefit !  Over  large  portions  of  the  West  India 
Islands,  great  quantities  of  excellent  land,  advantageously 
situated  as  regards  facility  of  communication  with  other 
countries,  under  exceptionally  healthy  climatic  conditions, 
and  much  of  which  had  been  formerly  under  a  high  state 
of  cultivation,  have  been  absolutely  abandoned,  or  are  in 
the  rapid  process  of  abandonment.  In  the  United  States, 
the  decline  in  the  value  of  land  has,  in  many  instances,  been 
also  very  notable.  In  the  New  England  States,  agricultural 
land,  not  remote  from  large  centers  of  population,  can  often 
be  bought  at  the  present  time  for  a  smaller  price  than  what 
fifty  years  ago  would  have  been  regarded  as  a  fair  appraisal, 
and  even  less  than  the  cost  of  the  buildings  and  walls  at 
present  upon  it.*  Since  the  last  decennial  appraisal  of  real 

*  In  1887  a  house  and  barn,  in  good  repair,  and  forty  acres  of  good  farming 
land  in  the  town  of  Killingsworth,  Conn.,  seventeen  miles  from  the  Connecti- 
cut River,  were  bought  for  a  church  rectory,  for  $360.  "  In  many  places  in 
the  very  heart  of  the  State  of  Massachusetts  it  is  as  it  was  in  Eden  when  we 
read  that '  there  was  not  a  man  to  till  the  ground.'  Thirty  miles  inward  from 
Worcester,  the  '  heart  of  tho  Commonwealth,'  there  are  whole  acres  which,  sixty 
years  ago,  sold  for  twenty-two  dollars  an  acre,  that  are  now  selling  for  eleven 
dollars  an  acre,  although  railroads  and  telegraphs  skirt  the  fields,  and  the 
fields  themselves  are  excellent  farm-land."—  Springfield  Republican. 


426  RECENT  ECONOMIC  CHANGES. 

estate  in  Ohio  (in  1880)  "  there  has  been  a  heavy  decline ; 
farm  property  is  from  25  to  50  per  cent  cheaper  to-day  than 
it  then  was."  *  In  Illinois,  according  to  the  Report  of  the 
Bureau  of  Labor  Statistics  for  1888,  there  has  been  an 
increase  in  land- values  in  that  State  since  1880  in  twenty- 
five  counties,  a  decrease  in  twenty  counties,  while  in  sixteen 
counties  values  have  remained  unchanged.  In  one  county 
— Madison — the  value  of  farm-lands  is  thought  to  have 
depreciated  33  per  cent  since  1880.  The  increase  in  the 
value  of  all  the  lands  in  the  State,  for  the  decade  1870-'80, 
according  to  the  United  States  census  for  the  latter  year 
— the  valuation  of  1870  being  reduced  to  a  gold  basis — was 
27  per  cent ;  but,  for  the  eight  years  from  1880  to  1888,  the 
net  gain  in  land-values  for  the  whole  State  is  now  esti- 
mated at  6-2  per  cent.  "  In  the  ten  cotton  States,  the  value 
of  agricultural  land  was  in  1860,  $1,478,000,000 ;  in  1880, 
$1,019,000,000,  a  decrease  of  $459,000,000.  It  would  re- 
quire an  addition  of  45  per  cent  of  its  value  in  1880  to  raise 
it  to  its  value  in  1860."  Meanwhile,  the  population  of 
these  same  States  has  increased  53  per  cent.  "  In  1860,  the 
value  per  acre  of  improved  land  in  Georgia  was  $6 ;  in  1886, 
below  $3.50 ;  decrease,  $2.50.  "Were  the  agricultural  land 
divided  out  among  the  people,  the  value  per  head  would 
have  been :  in  1860,  $150 ;  in  1886,  $63 ;  decrease,  $87.  f 

*  "  Inaugural  Address  of  Governor  Foraker,"  January,  1887. 

t  Keport  of  a  committee  of  citizens  of  the  ten  cotton-growing  States  ("  Sam  " 
Barnett,  of  Georgia,  chairman),  "On  the  Causes  of  the  Depressed  Condition 
of  Agriculture,  and  the  Remedies,"  1887. 


XL 

The  economic  outlook,  present  and  prospective — Necessity  of  studying  the 
situation  as  an  entirety — Compensation  for  economic  disturbances — In- 
equality in  the  distribution  of  wealth  a  less  evil  than  equality  of  wealth — 
The  problem  of  poverty  as  affected  by  time— Tendency  of  the  poor  toward 
the  centers  of  population — Eelation  of  machinery  to  the  poverty  problem 
— Reduction  of  the  hours  of  labor  by  legislation — Fallacy  of  eight-hour 
arguments — The  greatest  of  gains  from  recent  material  progress — In- 
crease of  comfort  to  the  masses  from  decline  of  prices — Oleomargarine 
legislation — Difference  between  wholesale  and  retail  prices — Eelation  be- 
tween prices  and  poverty — Individual  differences  in  respect  to  the  value- 
perceiving  faculty — Characteristics  of  the  Jews — Relative  material  progress 
of  different  countries — Material  development  of  Australia  and  the  Argen- 
tine Republic — Great  economic  changes  in  India — Great  material  progress 
in  Great  Britain — The  economic  changes  of  the  future — Further  cheapen- 
ing of  transportation — Future  of  agriculture — Position  of  the  last  third  of 
the  nineteenth  century  in  history. 

IN  the  preceding  chapters  an  attempt  has  been  made  to 
trace  out  and  exhibit  in  something  like  regular  order  the 
causes  and  the  extent  of  the  industrial  and  social  changes 
and  accompanying  disturbances,  which  have  especially  char- 
acterized the  last  fifteen  or  twenty-five  years  of  the  world's 
history.  The  questions  which  connect  themselves  with, 
and  are  prompted  by,  such  an  inquiry  and  exhibit,  are  nu- 
merous and  relate  to  widely  different  subjects.  But,  of  all 
these,  the  one  of  greatest  interest  and  importance  is,  What 
has  been,  and  what  is  likely  to  be,  the  effect  of  these  com- 
plex economic  changes — of  this  recent  and  unquestionably 
great  material  progress — on  the  mass  of  mankind  ?  Has  it 
been,  and  is  it  to  be  in  the  future,  for  the  better  or  the  worse  ? 
To  not  a  few,  as  experience  abundantly  and  also  unfortu- 
nately proves,  a  ready  and  sufficient  answer  may  seem  pos- 


428  RECENT  ECONOMIC  CHANGES. 

sible ;  but  most  of  those  who  through  continued  study  aud 
reflection  have  endeavored  to  qualify  themselves  for  answer- 
ing, will  probably  agree  that,  upon  no  other  one  subject, 
apart  from  theology,  does  the  line  of  investigation  run  so 
rapidly  into  deep  waters.  The  more  difficult,  however,  it  is 
to  emerge  from  such  depths,  the  more  important  is  it  to  lay 
hold  of  and  put  in  place  whatever  may  serve  as  stepping- 
stones  to  attain  more  definite  conclusions  than  are  now  pos- 
sible— conclusions  which,  while  helping  continually  to  more 
comprehensive  views  of  the  situation,  will  also  make  all  re- 
medial action  on  the  part  of  society  for  acknowledged  soci- 
etary  evils,  more  intelligent,  and  consequently  more  effect- 
ive ;  and  it  is  in  this  direction  that  the  line  of  most  desirable 
work,  and  the  movement  for  solving  the  difficult  involved 
problems,  would  for  the  present  seem  to  lie.  Entertaining 
these  views,  the  following  deductions,  in  addition  to  those 
which  have  been  incorporated  into  the  preceding  pages — 
which  from  the  outset  have  been  designed  to  be  historical 
and  not  controversial  —  are  finally  and  deferentially  sub- 
mitted. 

It  seems  clear  that  the  first  and  most  essential  thing  for 
all  those  who  are  desirous  of  determining  the  extent  of  the 
evils  which  the  recent  economic  disturbances  have  occa- 
sioned, and  what  course  of  procedure  on  the  part  of  society 
and  individuals  is  likely  to  prove  most  remedial  of  them,  is 
to  endeavor  to  understand  the  situation  as  an  entirety  ;  and 
that  effort  is  likely  to  be  ineffectual  and  disturbance  intensi- 
fied by  all  discussions  and  actions  that  start  from  any  other 
basis.  In  fact,  one  of  the  remarkable  features  of  the  situ- 
ation has  been  the  tendency  of  many  of  the  best  men  in  all 
countries  to  rush,  as  it  were,  to  the  front,  and,  appalled  by 
some  of  the  revelations  which  economic  investigators  every- 
where reveal,  and  with  the  emotional  largely  predominating 
over  their  perceptive  and  reasoning  faculties,  to  proclaim 
that  civilization  is  a  failure,  or  that  something  ought  im- 
mediately to  be  done,  and  more  especially  by  the  state,  with- 


PESSIMISTIC  PREDICTIONS.  429 

out  any  very  clear  or  definite  idea  of  what  can  be  done,  or 
with  any  well-considered  and  practical  method  of  doing. 
How  human  society  is  ever  to  be  at  any  time  anything  but 
the  product  of  human  character  and  culture,  they  never  tell 
us ;  but  they  intimate  that  if  the  industrious  do  not  promptly 
divide  more  freely  with  the  idle,  the  frugal  with  the  im- 
provident, the  workers  with  the  drones,  there  will  be  trouble 
— mysterious  in  its  nature,  but  unknown  in  amount.  The 
position  of  the  Eussian  novelist  Tolstoi,  before  noticed,  is  a 
case  in  point.  The  distressing  picture  of  what  the  world 
has  come  to  during  the  fifty  years  of  the  reign  of  Queen 
Victoria,  as  drawn  by  the  poet  Tennyson  in  his  new  "  Locks- 
ley  Hall,"  and  which  Mr.  Gladstone  has  so  impressively  re- 
viewed and  effectually  disapproved,  is  another.  To  what  a 
doleful  condition  mankind  is  certainly  tending,  as  the  result 
of  the  unprecedented  accumulation  of  knowledge  in  the 
present  age,  is  foretold  by  Mr.  "W.  H.  Mallock,  in  the  fol- 
lowing assemblage  of  words,  in  which  mysticism  rather  than 
sense  is  predominant : 

"  For  the  first  time,"  he  says,  "  man's  wide  and  varied  history  has 
become  a  coherent  whole  to  him.  Partly  a  cause  and  partly  a  result 
of  this,  a  new  sense  has  sprung  up  in  him — an  intense  self-conscious- 
ness as  to  his  own  position  ;  and  his  entire  view  of  himself  is  under- 
going a  vague  change.  It  is  impossible  to  conceive  that  this  awaken- 
ing, this  discovery  by  man  of  himself,  will  not  be  the  beginning  of  his 
decadence ;  that  it  will  not  be  the  discovery  on  his  part  that  he  is  a 
lesser  and  a  lower  thing  than  he  thought  he  was,  and  that  his  condi- 
tion will  not  sink  till  it  tallies  with  his  own  opinion  of  it." 

On  the  other  hand,  it  may  be  confidently  asserted  that  & 
comprehensive  view  of  the  situation  will  show  that  not  an 
evil  referable  to  recent  economic  changes  or  disturbances 
can  be  cited  which  has  not  been  attended  with  much  in  the 
way  of  alleviation  or  compensation,  the  comparison  being 
between  individuals  and  classes  and  society  as  a  whole. 
Thus,  the  facts  in  relation  to  the  wages  earned  by  the  poor 
men  and  women  who  work  for  the  sellers  of  cheap  clothing, 


430  RECENT  ECONOMIC  CHANGES. 

and  who  seem  to  be  unable  to  find  any  more  remunerative 
occupations,  are  indeed  pitiful ;  but,  if  clothes  were  not  thus 
made  cheap,  many  would  be  clothed  far  more  poorly  than 
they  now  are,  or  possibly  not  at  all.  It  is  not  the  rich  man 
who  buys  "  slop  "  coats  and  shirts,  but  the  man  who,  if  he 
could  not  be  thus  supplied,  would  go  ragged  or  without 
them.  If  the  decline  in  the  price  of  cereals  and  in  the 
value  of  arable  land  has  forced  many  who  follow  agricult- 
ural pursuits  out  of  employment,  there  never  was  a  time  in 
the  history  of  the  world  when  the  mass  of  mankind  were  fed 
so  abundantly  and  so  cheaply  as  at  present.  If  the  decline 
in  the  rates  of  interest  on  capital  has  been  a  sore  grievance 
to  the  small  capitalists,  a  reduction  in  the  rate  of  income 
from  invested  property  "  means  in  the  final  analysis  that 
the  world  pays  less  than  it  has  before  for  the  use  of  its 
machinery,  and  that  labor  is  obtaining  a '  larger '  and  capital 
a  '  smaller '  share  of  the  compensation  paid  for  production." 
Inequality  in  the  distribution  of  wealth  seems  to  many 
to  constitute  the  greatest  of  all  social  evils.  But,  great  as 
may  be  the  evils  that  are  attendant  on  such  a  condition  of 
things,  the  evils  resulting  from  an  equality  of  wealth  would 
undoubtedly  be  much  greater.  Dissatisfaction  with  one's 
condition  is  the  motive  power  of  all  human  progress,*  and 
there  is  no  such  incentive  for  individual  exertion  as  the  ap- 
prehension of  prospective  want.  If  everybody  was  content 
with  his  situation,  or  if  everybody  believed  that  no  improve- 
ment of  his  condition  was  possible,  the  state  of  the  world 
would  be  that  of  torpor,  or  even  worse,  for  society  is  so  con- 
stituted that  it  can  not  for  any  length  of  time  remain  sta- 
tionary, and,  if,  it  does  not  continually  advance,  it  is  sure  to 
retrograde,  f 

*  "  The  incentives  of  progress  are  the  desires  inherent  in  human  nature — 
the  desire  to  gratify  the  wants  of  the  animal  nature,  the  wants  of  the  intellectual 
nature,  and  the  wants  of  the  sympathetic  nature — desires  that,  short  of  infinity, 
can  never  be  satisfied,  as  they  grow  by  what  they  feed  on." — HENBT  GEORGE. 

t  The  conditions  which  are  naturally  imbedded,  as  it  were,  in  human  na- 


INEQUALITY  IN  DISTRIBUTION  OF  WEALTH.     431 

It  is  a  matter  of  regret  that  those  who  declaim  most 
loudly  against  the  inequalities  in  the  distribution  of  wealth, 
and  are  ready  with  schemes  for  the  more  "  equal  division  of 
unequal  earnings"  as  remedies  against  suffering,  are  the 
ones  who  seem  to  have  the  least  appreciation  of  the  posi- 
tive fact,  that  most  of  the  suffering  which  the  human  race 
endures  is  the  result  of  causes  which  are  entirely  within  the 
province  of  individual  human  nature  to  prevent;  and  that, 
therefore,  reformation  of  the  individual  is  something  more 
important  than  the  reformation  of  society.  Furthermore, 
"  the  accumulation  of  wealth  and  the  centralization  of  pro- 
duction and  trade  in  great  combinations  have  never,  as  a 
rule,  in  the  United  States,  been  a  source  of  oppression,  or 
of  poverty  to  the  non-capitalist  or  wage- worker  " ;  and,  very 
curiously,  almost  every  investigation  into  the  wages  and 
employments  of  the  poorer  classes  shows  that  their  greatest 


ture,  and  which  war  against  the  realization  of  the  idea  of  an  ultimate  equality 
in  the  distribution  or  possession  of  capital,  have  been  thus  clearly  and  forcibly 
pointed  out  by  Mr.  George  Baden  Powell,  in  his  "  New  Homes  for  the  Old 
Country,"  published  in  1872  after  a  visit  to  Australia  and  New  Zealand : 
"  Since  the  arrival  of  man  in  the  world  there  have  been  perpetual  questionings 
as  to  why  all  men  are  not  well  off.  Why  should  the  good  things  of  this  life 
be  so  unequally  distributed  3  The  two  great  causes,  one  as  powerful  as  the 
other,  are  circumstances  and  talents.  But  these  two  opposite  causes  all  through 
man's  life  influence  each  other  greatly.  Circumstances  call  forth  peculiar  tal- 
ents which  might  otherwise  be  uselessly  dormant,  and  talents  often  take  ad- 
vantage of  peculiar  circumstances  which  might  otherwise  be  overlooked  and 
missed.  It  is  by  no  means  improbable  that  as  the  world  grows  wiser  some 
means  will  be  found  of  considerably  raising  the  lowest  stage  of  existence,  but 
it  is  entirely  against  the  nature  of  things  that  all  should  be  equal  in  everyway. 
Innate  pride  continually  urges  men  to  seek  that  which  is  above  them,  and  to 
many  happiness  in  life  is  the  mere  gaining  of  such  successive  steps.  The 
essential  rule  is  to  work  one's  own  circumstances  to  the  highest  point  attain- 
able by  means  of  the  talents  possessed.  These  talents  may  be  said  to  resolve 
themselves  into  various  capitals,  and  a  man  may  have  capital  for  the  improve- 
ment of  his  condition  in  the  form  of  money,  brains,  or  health  and  strength — 
in  fact,  he  may  thrive  by  the  possession  of  '  talents,'  whether  of  gold,  of  the 
mind,  or  of  the  body.  With  this  fully  recognized  fact  of  the  diversities  of 
capital,  it  would  seem  obviously  impossible  for  a  people  to  continue  long  in  the 
humanly  imposed  possession  of  equal  personal  shares  in  any  capital." 


432  RECENT  ECONOMIC  CHANGES. 

oppressors  are  very  frequently  the  comparatively  poor  them- 
selves. 

To  understand  the  problem  of  poverty,  especially  with 
reference  to  remedial  effects,  as  it  at  present  exhibits  itself, 
it  is  necessary  to  look  at  it  comprehensively  from  two  differ- 
ent standpoints.  Viewed  from  the  standpoint  of  twenty  or 
twenty-five  years  ago,  or  before  what  may  be  termed  the 
advent  of  the  "  machinery  epoch,"  there  is  no  evidence  that 
the  aggregate  of  poverty  in  the  world  is  increasing,  but 
much  that  proves  to  the  contrary.  The  marked  prolonga- 
tion of  human  life,  or  the  decline  in  the  average  death-rate, 
in  all  countries  of  high  civilization ;  the  recognized  large 
increase  in  such  countries  in  the  per  capita  consumption  of 
all  food  products ;  and  the  further  fact  that  fluctuations  in 
trade  and  industry,  calamitous  as  they  still  are,  are  less  in 
recent  times  than  they  used  to  be,  and  less  disastrous  on  the 
whole  in  their  effects  on  the  masses,  are  absolutely  conclu- 
sive on  this  point.  Great  as  has  been  the  depression  of 
business  since  1873,  there  is  no  evidence  that  it  has  yet 
made  any  impression  on  the  "  stored  wealth  "  of  the  people 
of  the  great  commercial  countries ;  and  that,  slow  as  is  the 
accumulation  of  capital,  a  year  probably  now  never  passes 
in  which  some  addition  is  not  made  to  the  previous  sum  of 
the  world's  material  resources.  The  recognized  tendency  of 
the  poor  to  crowd  more  and  more  into  the  great  centers  of 
population — drawn  thither,  undoubtedly,  in  no'  small  part 
by  the  charities  which  are  there  especially  to  be  found,  and 
also  by  the  fact  that  town  labor  is  better  paid  than  country 
labor — and  the  contrasts  of  social  conditions,  which  exhibit 
themselves  more  strikingly  at  such  centers  than  elsewhere,  * 

*  "  It  might  sound  paradoxical,  but  it  was  nevertheless  true,  that  while 
those  who  had  means  were  perpetually  trying  to  get  out  from  London,  those 
who  were  destitute  were  always  trying  to  find  their  way  in.  There  were  tens 
of  thousands  of  men  who  preferred  to  live  or  starve  in  the  streets  of  London 
rather  than  work  in  comparative  comfort  in  the  fields." — FBKDEBIO  HARBISON. 

Recent  investigations  have  also  shown  that  London,  in  particular,  is 


DRIFT  OF  POPULATION  TO  CITIES.  433 

naturally  cause  popular  observation  of  poverty  to  continu- 
ally center,  as  it  were,  at  its  focus  of  greatest  intensity,  and 
create  impressions  and  induce  conclusions  that  broader  and 
more  systematized  inspections  often  fail  to  substantiate.* 

No  proposition,  for  example,  finds  a  more  general  accept- 
ance among  the  unthinking  masses  than  that  a  sparse  popu- 
lation always  commands  higher  wages  and  a  higher  standard 
of  comfort  than  a  dense  one;  and  yet  there  is  hardly  a 
proposition  in  economics  which  can  command  so  little  evi- 
dence in  its  favor  from  the  results  of  experience. 

"  Even  in  the  middle  ages  it  was  only  the  places  where  population 
was  dense  that  wages  were  high,  and  in  modern  times  the  thinner  the 
people  on  the  land  the  lower  is  their  standard  of  comfort ;  the  laborer, 
for  example,  in  some  parts  of  Austria  and  Hungary,  where  labor  is 
scarce,  being  worse  fed  than  the  average  of  English  paupers.  The 

swollen  mainly  by  its  births,  and  that  the  total  increase  from  immigration 
into  that  city,  alter  deducting  the  emigration  from  it,  is  only  about  10,000  a 
year.  "  London  is,  in  fact,  a  nation  of  five  millions,  and  that  a  nation  of  five 
millions  should  increase  by  one  and  a  half  per  cent  a  year,  or  75,000,  is  nothing 
hi  the  present  condition  of  human  affairs,  when  we  have  neither  wars  nor 
famines  nor  pestilences  to  create  the  least  surprise  among  the  well-informed. 
An  addition  of  7,500  a  year  to  a  city  of  half  a  million  would,  indeed,  cause 
scarcely  a  remark." 

*  A  chapter  from  the  recent  experience  of  the  city  of  Brooklyn,  New  York, 
in  respect  to  pauperism,  affords  a  very  striking  illustration  of  this  statement. 
In  the  five  years  from  1874  to  1878  inclusive,  the  number  of  persons  who  asked 
and  received  outside  poor  relief  from  the  city  authorities  increased  more  than 
fifty  per  cent,  while  the  increase  hi  the  population  of  the  city  during  the  same 
period  was  less  than  fourteen  per  cent.  The  evidence  would,  therefore,  almost 
seem  conclusive  that  the  masses  of  this  city  were  rapidly  becoming  poorer  and 
poorer.  In  the  latter  year,  however,  the  system  of  giving  outside  poor  relief 
was  wholly  discontinued.  It  was  feared  by  many  that  this  action  would  lead 
to  great  distress  and  suffering,  and  many  charitable  persons  made  prepara- 
tions to  meet  the  demands  they  expected  would  be  made  upon  them.  Noth- 
ing of  the  kind  occurred.  Not  only  was  the  whole  number  (46,093)  drawing 
aid  from  the  county  wholly  stopped,  but  it  was  also  accompanied  by  a  de- 
creased demand  on  the  public  institutions  and  private  relief  societies  of  the 
city,  and  a  reduction  in  the  number  of  inmates  in  the  almahouse.  The  teach- 
ing "t'tliis  experience,  which  has  since  been  elsewhere  substantiated,  is,  there- 
fore, to  the  effect  that  what  seem  to  be  unmistakable  proofs  of  increasing  pov- 
erty were  merely  methods  to  supplement  wages  on  the  gains  from  mendicancy. 


434:  RECENT  ECONOMIC  CHANGES. 

great  increase  in  the  population  of  England  during  the  last  half-cent- 
ury has  been  accompanied  by  an  extraordinary  rise  in  wages;  and  it  is 
in  London,  where  the  population  is  most  dense,  and  not  in  any  decay- 
ing towns  in  Great  Britain  or  on  the  Continent,  that  wages  are  the 
highest.  The  concentration  of  energy  caused  by  a  thick  population 
more  than  pays  for  the  extra  food  consumed,  and  the  fluctuations  of 
wages  are  caused  by  the  rise  and  fall  in  the  demand  for  the  article 
made,  not  by  the  rise  and  fall  in  the  number  of  those  who  make  it. 
The  absolute  and  final  proof  of  that  is,  that  in  any  manufacturing 
town  a  time  of  low  wages  and  a  time  of  complaint  about  want  of  em- 
ployment always  go  together.  It  is  when  a  trade  becomes  brisk  and 
hands  crowd  in  from  all  less  employed  places,  and  the  population  in- 
creases every  year,  that  wages  are  at  their  highest.  In  the  popular  mind 
the  immense  importance  of  a  great  supply  of  labor  is  overlooked,  and 
it  is  assumed  unconsciously  that  this  labor  is  given  without  adequate 
return.  That  is  not  so,  wages  being  always  highest  in  the  fullest  cen- 
ters of  industry.  There  are  districts  of  England  where  two  masters 
are  seeking  one  man,  and  where  wages,  nevertheless,  are  under  twelve 
shillings  a  week,  the  cause  being  not  any  thickness  or  thinness  of  popu- 
lation, but  the  unprofitableness  of  growing  cereals  at  present  prices. 
There  is,  of  course,  danger  of  a  kind  in  any  great  aggregation  of  popu- 
lation, because  any  trade  may  be  suspended,  as  the  cotton  industry 
was,  by  an  unexpected  misfortune ;  but  the  danger  is  political,  not 
economic.  If  the  bulk  of  the  workers  of  Lancashire  had  moved  away 
in  that  famine,  the  wages  of  the  remainder  would  not,  when  prosperity 
returned,  have  been  perceptibly  higher.  Population  is  in  one  way  a 
cause  of  trade,  just  as  much  as  steam-power  is ;  and,  if  England  had 
fifty  millions,  we  should  probably  find  her  trade  proportionately  in- 
creased and  wages  as  high  as  ever.  She  would,  in  fact,  have  attracted 
business  which  without  her  free  command  of  labor  in  masses  would 
never  have  reached  her  shores.  That  is  the  secret,  to  take  a  single  in- 
stance, of  the  great  and  growing  prosperity  of  Bombay  as  a  city  of 
manufactures — a  prosperity  which,  though  it  has  brought  population, 
has  raised  and  not  lowered  the  average  of  wages."  * 

One  thing  which  those  interested  in  the  discussion  of 
these  societary  problems  need  especially  to  recognize  more 
fully  than  is  generally  done  is,  that,  in  most  of  the  leading 
nations,  systematic  and  rigid  investigations,  in  respect  to 
most  economic  subjects  and  questions,  have  now  been  prose- 

*  London  "  Economist." 


NEW  FACTOR  IN  THE  PROBLEM  OF  POVERTY.  435 

cuted  for  a  considerable  period  by  governments  and  indi- 
viduals ;  that  the  broad  general  conclusions  deducible  there- 
from in  respect  to  mortality,  health,  wages,  prices,  pauperism, 
population,  and  the  like,  are  not  open  to  anything  like  rea- 
sonable doubt  or  suspicion;  and  also  that  the  pessimistic 
views  which  many  entertain  as  to  the  future  of  humanity 
are  often  directly  due  to  the  exposure  of  bad  social  condi- 
tions which  have  been  made  in  course  of  these  investigations 
with  the  purpose  of  amending  them. 

During  the  last  quarter  of  a  century,  however,  the  prob- 
lem of  poverty  has  been  complicated  by  a  new  factor ; 
namely,  the  displacement  of  common  labor  by  machinery, 
which  has  been  greater  than  ever  before  in  one  generation 
or  in  one  country.  To  what  extent  the  numbers  of  the 
helpless  poor  have  been  increased  from  this  cause  is  not 
definitely  known ;  but  the  popular  idea  is  doubtless  a  greatly 
exaggerated  one.  In  fact,  considering  the  number  and  ex- 
tent of  the  agencies  that  have  been  operative,  it  is  a  matter 
of  wonderment  that  these  influences  in  this  direction  have 
not  been  greater.  In  the  United  States  little  or  no  evidence 
has  yet  been  presented  that  there  has  been  any  increase  in 
poverty  from  this  cause.*  In  London,  where  the  cry  of  dis- 

*  According  to  the  Report  of  the  Bureau  of  Statistics  of  Labor  for  Massa- 
chusetts for  1887,  the  whole  number  of  persons  of  both  sexes  in  that  State, 
who  were  unemployed  at  their  principal  occupation  during  some  part  of  the 
year  preceding  the  date  of  the  census  enumeration  (May  1, 1885),  was  241,589, 
of  whom  178,168  were  males  and  69,961  were  females.  Comparing  these  fig- 
ures with  those  of  the  population  in  1885,  viz.,  1,941,465,  it  is  found  that  for 
every  8'04  persons  there  was  one  person  unemployed  for  some  part  of  the  year 
at  his  or  her  principal  occupation,  the  percentage  of  unemployed  being  greater 
in  the  caae  of  males  and  less  in  the  case  of  females.  These  conclusions,  how- 
ever, throw  no  light  on  the  number  of  persons  who  were  unemployed  by  rea- 
son of  displacement  by  machinery ;  and  are  also  likely  to  mislead,  unless  suffi- 
cient consideration  is  given  to  the  fact  that  the  number  of  industrial  occupations 
which  only  admit  of  being  prosecuted  during  a  portion  of  the  year  is  in  every 
community  very  considerable.  And,  as  a  matter  of  fact,  the  investigations  in 
question  show  that  there  were  only  882  persons,  representing  hardly  more  than 
one  third  of  one  per  cent  of  the  whole  number  of  the  unemployed  in  this  State, 
who  were  returned  a»  having  been  unemployed  during  the  entire  twelve  months. 


436  RECENT  ECONOMIC  CHANGES. 

tress  is  at  present  especially  loud  and  deep,  it  is  "  noteworthy 
that  no  measures  have  yet  been  taken  to  ascertain  whether 
that  distress  is  normal  or  abnormal,  and  whether  it  is  in- 
creasing or  decreasing."*  But  even  here  the  opinion,  based 
on  what  is  claimed  to  be  an  exhaustive  inquiry,  has  been 
expressed  that,  "although  the  number  of  those  who  are 
both  capable  and  willing  to  give  fair  work  for  fair  pay 
and  are  at  the  same  time  destitute,  is  in  the  aggregate 
considerable,  they  yet  form  but  a  very  small  proportion 
of  the  unemployed  "  ;  and  "  that  probably  not  over  two 
per  cent  of  the  destitute  are  persons  of  good  character 
as  well  as  of  average  ability  in  their  trades."  f  "  It  is  by 
no  means  settled  that  we  have  too  much  labor;  indeed, 
the  evidence  is  rather  the  other  way.  In  many  agricult- 
ural districts  there  are  not  hands  enough  left  to  do  the 
work,  and  from  almost  all  trades  the  report  comes  in  that 
no  skilled  hand  who  will  do  work  need  now  lack  employ- 
ment." I 

The  following  additional  facts,  of  a  more  general  nature, 
are  also  pertinent  to  this  subject :  That  wages  everywhere 
have  not  fallen  but  advanced,  as  a  sequence  to  the  introduc- 
tion and  use  of  cheaper  and  better  machinery  and  processes, 
proves  that  labor,  through  various  causes,  probably  in  the 
main  by  reason  of  increased  consumption — has  not  yet  been 
supplanted  or  economized  by  such  changes  to  an  extent  suf- 
ficient to  reduce  wages  through  any  competition  of  the  un- 
employed. The  multiplicity  and  continuance  of  strikes, 
and  the  difficulty  experienced  in  filling  the  places  of  strikers 
with  a  desirable  quality  of  labor,  are  also  evidence  that  the 
supply  of  skilled  labor  in  almost  every  department  of  industry 
is  rather  scarce  than  abundant. 


*  "  The  Distress  in  London,"  "  Fortnightly  Eeview,"  London,  January, 
1888. 

t  "  The  Workless,  the  Thriftless,  and  the  Worthless,"  "  Contemporary 
Eeview,"  London,  January,  1888. 

t  London  "  Economist,"  January  26, 1889. 


RELATIONS  OF  MACHINERY  TO  WAGES.         43? 

Again,  it  is  a  matter  of  general  experience,  that  when  in 
recent  years,  wages,  by  reason  of  a  depression  of  prices,  have 
been  reduced  in  any  specialty  of  production,  such  reductions 
have  been  mainly  temporary,  and  are  rarely,  if  ever,  equal  to 
the  fall  in  the  prices  of  the  articles  produced ;  which  in  turn 
signifies  that  the  loss  contingent  on  such  reductions  has 
been  mainly  borne  by  capital  in  the  shape  of  diminished 
profits. 

Notwithstanding  all  this,  it  will  have  to  be  admitted  that 
the  immense  changes  in  recent  years  in  the  conditions  of 
production  and  distribution  have  considerably  augmented — 
especially  from  the  ranks  of  unskilled  labor  and  from  agri- 
cultural occupations — the  number  of  those  who  have  a  right- 
ful claim  on  the  world's  help  and  sympathy.  That  this 
increase  is  temporary  in  its  nature,  and  not  permanent,  and 
that  relief  will  ultimately  come,  and  mainly  through  an  ad- 
justment of  affairs  to  the  new  conditions,  by  a  process  of 
industrial  evolution,  there  is  much  reason  to  believe.  But, 
pending  the  interval  or  necessary  period  for  adjustment, 
the  problem  of  what  to  do  to  prevent  a  mass  of  adults, 
whose  previous  education  has  not  qualified  them  for  taking 
advantage  of  the  new  opportunities  which  material  progress 
offers  to  them,  from  sinking  into  wretchedness  and  perhaps 
permanent  poverty,  is  a  serious  one,  and  one  not  easy  to 
answer. 

A  comprehensive  review  of  the  relations  of  machinery  to 
wages,  by  those  who  by  reason  of  special  investigations  are 
competent  to  judge,  has  led  to  the  following  conclusions : 
When  machinery  is  first  introduced  it  is  imperfect,  and  re- 
quirqp  a  high  grade  of  workmen  to  successfully  operate  it ; 
and  these  for  a  time  earn  exceptionally  high  wages.  As 
time  goes  on,  and  the  machinery  is  made  more  perfect  and 
automatic,  the  previous  skill  called  for  goes  up  to  better 
work  and  better  pay.  Then  those  who  could  not  at  the 
outset  have  operated  the  machinery  at  all,  are  now  called 
in ;  and  at  higher  wages  than  they  had  earned  before  (al- 


438  RECENT  ECONOMIC  CHANGES. 

though  less  than  was  paid  to  their  predecessors),  they  do 
the  work.  Capital  in  developing  and  applying  machinery 
may,  therefore,  be  fairly  regarded  as  in  the  nature  of  a  force ; 
unintentionally,  but  of  necessity,  continually  operating  to 
raise  all  industrial  effort  to  higher  and  better  conditions : 
and  herein  we  have  an  explanation  of  the  economic  phe- 
nomenon, that  while  the  introduction  of  improved  machinery 
economizes  and  supplements  labor,  it  rarely  or  never  reduces 
wages. 

One  of  the  most  curious  features  of  the  existing  economic 
situation  is  the  advocacy  of  the  idea,  and  the  degree  of  pop- 
ular favor  which  has  been  extended  to  it,  that  a  reduction 
of  the  hours  of  labor,  enforced,  if  needs  be,  by  statute,  is  a 
"  natural  means  for  increasing  wages  and  promoting  prog- 
ress."* This  movement  in  favor  of  a  shorter  day  of  work 
is  not,  however,  of  recent  origin,  inasmuch  as  it  has  greatly 
commended  itself  to  public  sentiment  in  Great  Britain  and 
in  the  United  States  for  many  years,  and  more  recently  in  a 
smaller  degree  in  the  states  of  Continental  Europe.  But  it 
is  desirable  to  recognize  that  the  early  agitation  in  further- 
ance of  this  object,  and  the  success  which  has  attended  it, 
were  based  on  reasons  very  different  from  those  which  un- 
derlie the  arguments  of  to-day.  Thus,  in  England  and  on 
the  Continent,  the  various  factory  acts  by  which  the  day's 
labor  has  been  shortened,  were  secured  by  appealing  to  the 
moral  sense  of  the  community  to  check  the  overworking  of 
women  and  children ;  or,  in  other  words,  most  of  such  legis- 
lation has  thus  far  been  influenced  by  moral  considerations, 
and  has  so  commended  itself  by  its  results  that  there  is 
probably  no  difference  of  opinion  in  civilized  countries^  to 
its  desirability.  But  the  form  which  this  movement  has  of 
late  assumed  is  entirely  different.  It  is  now  economic,  and 
not  moral,  and  its  final  analysis  is  based  on  the  assumption 

*  "  Wealth  and  Progress,"  by  George  Gunton.    D.  Appleton  &  Co.,  New 
York. 


REDUCTION  OP  HOURS  OF  LABOR  BY  STATUTE.  439 

that  the  laborer  can  obtain  more  of  wealth  or  comfort  by 
working  less. 

It  would  seem  to  need  no  elaborate  argument  to  demon- 
strate the  absurdity  of  this  position.  Production  must  pre- 
cede consumption  and  enjoyment,  and  the  only  way  in  which 
the  ability  of  everybody  to  consume  and  enjoy  can  be  in- 
creased is  by  increasing,  so  to  speak,  the  output  of  the  whole 
human  family.  If  production  be  increased,  the  worker  will 
necessarily  receive  a  larger  return ;  if  diminished,  he  will 
necessarily  get  a  smaller  return.  And  it  makes  no  difference 
whether  the  diminution  be  effected  by  reduction  in  the 
hours  of  work,  or  by  less  effective  work,  or  by  disuse  of 
labor-saving  machinery,  or  by  other  obstructive  agencies. 
The  result  will  inevitably  be  the  same  :  there  will  be  less  to 
divide  among  the  producers  after  the  constantly  diminishing 
returns  of  capital  have  been  withdrawn. 

It  will  doubtless  be  urged  that  man's  knowledge  and 
control  of  the  forces  of  Nature  have  increased  to  such  an 
extent  in  recent  years  that  almost  any  given  industrial  result 
can  be  effected  with  much  less  of  physical  effort  than  at 
any  former  period ;  and  therefore  a  general  and  arbitrary 
reduction  of  the  hours  of  labor,  independent  of  what  has 
already  occurred  and  is  further  likely  to  occur  through  the 
quiet  influence  of  natural  agencies,  is  not  only  justifiable, 
but  every  way  practicable.  This  would  undoubtedly  be  true 
if  mankind  were  content  to  live  as  their  fathers  did.  But 
they  are  not  so  content.  They  want  more,  and  this  want  is 
so  progressive  that  the  satisfactions  of  to-day  almost  cease 
to  be  satisfactions  on  the  morrow.  But  what  "  more "  of 
abundance,  comfort,  and  even  luxury  to  the  masses  has  been 
achieved — and  its  aggregate  has  not  been  small — has  not 
been  brought  about  by  any  diminution  of  labor,  but  has 
been  due  mainly  to  the  fact  that  the  labor  set  free  by  the 
utilization  of  natural  forces  has  been  re-employed,  as  it  were, 
to  produce  them ;  or,  in  other  words,  recent  material  prog- 
ress is  more  correctly  defined  by  saying  that  it  consists  in 


440  RECENT  ECONOMIC  CHANGES. 

the  attainment  of  greater  results  with  a  given  expenditure 
of  labor,  rather  than  the  attainment  of  former  results  with 
a  diminished  expenditure. 

Whether  the  present  relation  of  production  to  consump- 
tion which  it  now  seems  necessary  should  be  maintained,  if 
the  present  status  of  abundance,  wages,  and  prices  is  to  be 
continued  and  further  progress  made,  can  be  maintained 
with  a  diminished  amount  of  labor,  may  not  at  present  ad- 
mit of  a  satisfactory  answer.  Production  in  excess  of  cur- 
rent demand,  or  over-production,  which  has  been  and  still 
is  a  feature  of  certain  departments  of  industry,  and  which 
may  seem  to  favor  an  affirmative  answer,  is  certain  to  be  a 
temporary  factor,  for  nothing  will  long  continue  to  be  pro- 
duced unless  there  is  a  demand  for  it  at  remunerative  prices 
from  those  possessed  of  means  to  purchase  and  consume, 
and  therefore  can  not  be  legitimately  taken  into  account  in 
forming  an  opinion  on  this  subject;  but,  other  than  this, 
all  available  evidence  indicates  that  the  answer  must  be  yet 
in  the  negative. 

Thus,  for  example,  the  latest  results  of  investigation  by 
the  Massachusetts  Bureau  of  Labor  Statistics  show  that 
during  the  year  1885  all  the  products  of  manufacture  in 
that  State  could  have  been  secured  by  steady  work  for  three 
hundred  and  seven  working  days  of  9-04  hours  each,  if  this 
steady  work  could  have  been  distributed  equally  among  all 
the  persons  engaged  in  manufactures.  But,  to  effect  such 
an  equitable  distribution  is  at  present  almost  impossible; 
and  if  it  could  be  brought  about,  a  reduction  of  the  hours 
of  labor  to  eight  per  day  in  such  industries,  as  has  been  ad- 
vocated by  not  a  few,  would  reduce  the  present  annual  prod- 
uct of  Massachusetts  to  the  extent  of  more  than  one  ninth. 
Apart,  therefore,  from  the  disastrous  competition  which 
would  be  invited  from  other  States  and  countries  where 
labor  was  more  productive,  to  expect  that  under  such  a  re- 
duction of  product  the  share  at  present  apportioned  to  the 
workers,  or,  what  is  the  same  thing,  the  existing  rates  of 


VALUE  OF  ACCUMULATED  PROPERTY.  441 

* 

wages  could  be  maintained,  seems  utterly  preposterous.  It 
is  not  even  too  much  to  say  that  the  very  existence  of  mul- 
titudes would  be  endangered,  if  the  present  energy  of  pro- 
duction were  diminished  twenty  per  cent.  And  in  this 
connection  how  full  of  meaning  is  the  following  deduction 
which  Mr.  Atkinson  finds  warranted  by  investigation,  namely : 
"  That  over  a  thousand  millions'  worth  of  product  must  be 
added  every  year  and  prices  be  maintained  where  they  now 
are,  in  order  that  each  person  in  the  United  States  may  have 
five  cents  more  than  he  now  does,  or  in  order  that  each  per- 
son engaged  in  any  kind  of  gainful  occupation  may  be  able 
to  obtain  an  increase  in  the  rate  of  wages  of  fifteen  cents  a 
day.  Great  and  undoubted,  therefore,  as  have  been  the 
benefits  accruing  from  machinery  and  labor-saving  inven- 
tions, the  margin  that  would  needs  be  traversed  in  order  to 
completely  neutralize  them  by  rendering  human  labor  less 
efficient,  is  obviously  a  very  narrow  one."  To  which  may 
be  added  that  there  is  probably  no  country  at  the  present 
time  where  the  entire  accumulated  property  would  sell  for 
enough  to  subsist  its  population  on  the  most  economic  terms 
for  a  longer  space  than  three  years. 

One  argument  now  frequently  advanced  in  favor  of  the 
establishment  by  legislation  of  eight  hours  as  the  uniform 
standard  of  a  day's  labor  is  worthy  of  notice,  from  the  curi- 
ous lack  of  foresight  which  it  displays.  An  hour  off  the 
day  of  every  workman  now  employed  would,  it  is  said,  create 
a  demand,  and  give  room  for  many  additional  laborers.  A 
recent  writer  *  estimates  that,  assuming  eleven  hours  as  the 
average  length  of  the  working  day  in  the  United  States,  an 
eight-hour  system,  or  a  uniform  reduction  of  three  hours 
labor  a  day,  "would  withdraw  the  product  of  28,416,477 
hours'  labor  a  day  from  the  market  without  discharging  a 
single  laborer."  What  would  then  happen  is  thus  de- 
scribed : 

*  Georgo  Gunton. 


442  RECENT  ECONOMIC  CHANGES. 

"  The  commercial  vacuum  thus  produced  would,  in  its  effect  upon 
labor  and  business,  be  equal  to  increasing  the  present  demand  over 
one  fourth,  and  create  a  demand  for  3,500,000  additional  laborers.  To 
meet  this  demand,  about  one  sixth  more  factories  and  workshops 
would  be  needed,  besides  setting  our  present  machinery  in  operation ; 
and  a  further  demand  for  labor  would  be  created  in  the  mines,  forges, 
furnaces,  iron-works,  and  the  various  industries  that  contribute  to  the 
building  and  equipment  of  the  requisite  new  factories  and  workshops. 
...  Nor  is  this  all.  The  new  demand  for  labor  thus  created  would 
necessarily  increase  the  number  of  consumers,  and  thereby  still  further 
enlarge  the  demand  for  commodities ;  and,  according  to  the  popular 
doctrine  of  supply  and  demand,  the  increased  demand  for  labor,  by 
reducing  competition  among  laborers,  must  tend  to  increase  wages. 

"  The  mass  of  laborers  throughout  the  country,  having  three  hours 
a  day  extra  time  for  leisure  and  opportunity,  and  being  less  exhausted, 
mentally  and  physically,  will  be  forced  into  more  varied  social  rela- 
tions— a  new  environment,  the  unconscious  influence  of  which  will 
naturally  awaken  and  develop  new  desires  and  tastes  that  will  slowly 
and  surely  crystallize  into  urgent  wants  and  fixed  habits,  making  a 
higher  standard  of  living  inevitable.  .  .  .  This  increased  consump- 
tion necessarily  implies  a  corresponding  increase  in  production,  and 
consequently  an  increased  demand  for  labor  and  higher  wages.  .  .  . 
It  is  therefore  manifest  that  the  general  and  permanent  economic 
effect  of  an  eight-hour  system  would  be  to  naturally  increase  the  aggre- 
gate consumption  and  production  of  wealth." 

Such  reasoning  naturally  prompts  to  the  asking  of  a  few 
pertinent  questions.  If  the  beneficial  results  named  are 
certain  to  follow  a  uniform  reduction  of  the  hours  of  labor 
from  eleven  to  eight  in  the  United  States,  why  arbitrarily 
limit  the  application  of  this  principle  ?  Why  not  fix  upon 
four  hours  as  the  day's  standard  ?  This  would  create  employ- 
ment for  over  7,000,000  in  place  of  3,500,000  laborers,  and 
render  necessary  the  erection  of  more  than  one  sixth  more 
new  factories  and  workshops  ?  Why,  in  short,  if  by  a  reduc- 
tion of  the  hours  of  labor  by  statute  we  can  infallibly  in- 
crease the  production  of  wealth  or  abundance,  will  not  the 
condition  of  the  race  be  infinitely  improved  by  a  general 
cessation  of  all  tiresome  exertion  ?  Furthermore,  those  who 
advance  the  above  argument  in  favor  of  a  reduction  of  the 


THE  DAY'S  STANDARD  OF  LABOR.  443 

hours  of  labor  by  arbitrary  legislative  enactment,  ignore 
completely  the  fact,  that  if  each  man  does  an  hour's  less 
work  a  day,  he  must  lose  an  hour's  pay,  and  that  therefore 
the  purchasing  power  of  the  men  now  employed  would  be 
reduced  by  exactly  the  amount  by  which  that  of  the  now 
unemployed  men  would  be  increased  by  employment.  If  it 
is  proposed  to  overcome  this  difficulty  by  incorporating  in 
the  statute  reducing  the  hours  of  labor  a  further  provision, 
that  employers  shall  pay  the  same  amount  for  eight  hours' 
service  that  they  formerly  had  for  nine  or  ten,  or  what  is 
the  same  thing,  shall  pay  for  "  idle  time,"  it  may  be  rejoined 
that  no  special  legislation  can  invalidate  the  economic  axiom, 
"Less  work,  less  pay,"  without  destroying  the  rights  of 
property,  and  with  it  civilization  itself.  Another  point  in 
connection  with  this  subject  is  worthy  of  attention.  That 
the  efficiency  of  labor  is  largely  increased  by  the  use  of  ma- 
chinery and  new  inventions  can  not  be  questioned.  The 
world  would  not  be  what  it  is  but  for  these  improvements. 
In  default  of  them  the  present  population  of  the  world 
could  not  exist,  even  in  a  state  of  savagery.  But  machinery 
can  not  work  alone.  It  is  made  useful  and  effective  only 
through  the  co-operation  of  human  labor — labor  of  hand 
and  of  brain.  But  if  men  are  to  work  only  four  fifths,  one 
half,  or  one  third  less  number  of  hours  than  at  present, 
then  the  working  hours  of  machinery  will  be  reduced  in  the 
same  proportion,  and  the  productiveness  of  labor  will  be 
diminished  not  in  proportion  to  the  reduction  in  the  num- 
ber of  hours  that  are  given  by  hand  and  brain,  but  in  a 
much  greater  proportion.  It  is  possible  to  even  completely 
neutralize  the  benefits  of  all  machinery  and  labor-saving  in- 
ventions by  making  human  effort  less  efficient. 

But  it  may  be  said  that  the  productive  work  of  machinery 
will  be  so  increased  by  new  inventions  and  discoveries  as  to 
compensate  for  any  reduction  in  productive  effect  likely  to 
follow  from  any  reduction  in  the  hours  of  labor  at  present 
contemplated.  This  may  be  in  the  future,  but  there  is  no 


444  RECENT   ECONOMIC  CHANGES. 

evidence  that  such  a  result  has  been  yet  attained.  Some 
years  ago  the  State  of  Massachusetts  enacted  that  the  labor 
of  women  and  children  should  not  exceed  ten  hours  per  day. 
The  practical  effect  of  this  in  textile  factories  was  to  cut 
down  the  labor  of  the  men  operatives  to  an  equal  extent. 
The  limit  of  working-time  in  such  establishments  being 
thus  shortened,  the  speed  of  the  machinery  was  generally  in- 
creased, and  thus,  within  a  few  months,  in  connection  with 
the  benefit  accruing  to  the  operatives  by  fewer  hours  of 
labor,  unquestionably  restored  the  former  level  of  production. 
But  manufacturers  now  agree  that  to  increase  the  speed  of 
machinery  to  an  extent  sufficient  to  compensate  for  any 
further  reduction  of  working- time  is  at  present  impossible.* 

The  course  of  events,  nevertheless,  warrants  mankind  in 
expecting  that  the  progress  which  has  been  made  in  recent 
years  in  diminishing  the  necessity  for  long  hours  of  labor 
will  be  continued ;  but  such  progress  will  be  permanent 
and  productive  of  the  highest  good  only  so  far  as  it  is  de- 
termined by  natural  agencies.  If  the  attempt  is  made  to 
save  the  time  of  the  masses  by  radical  and  artificial  methods, 
leisure  will  become  license ;  but,  if  they  can  be  taught  to 
save  their  own  time,  leisure,  as  already  pointed  out,  will  be 
opportunity. 

Finally,  in  all  discussions  of  this  subject,  it  is  of  the 
highest  importance  to  keep  steadily  in  view  the  one  great 
fact  taught  us  by  experience  in  respect  to  this  subject,  which 
is,  that,  thus  far  in  the  history  of  industry,  all  that  has  been 
achieved  in  the  way  of  diminishing  the  hours  of  labor  has 
been  the  result  of  conditions  rather  than  of  legislation. 

The  greatest  of  the  gains  that  have  accrued  to  the  masses 
through  recent  material  progress  has  been  in  the  saving  of 

*  At  the  recent  meeting  of  the  International  Labor  Congress,  in  England, 
the  delegates  agreed  that,  in  order  to  have  an  eight-hour  rule  work  success- 
fully, it  must  be  adopted  simultaneously  by  all  the  countries  of  Europe,  for,  in 
the  absence  of  this  general  acceptance,  the  country  that  maintained  the  ten- 
hour  system  would  obtain  the  work  which  the  others  would  necessarily  lose. 


NATURAL  SERVITUDE.  445 

their  time ;  not  so  much  in  the  sense  of  diminishing  their 
hours  of  labor,  as  in  affording  them  a  greater  opportunity 
for  individual  self -advancement  than  has  ever  before  been 
possible.  To  clearly  comprehend  this  proposition,  it  is 
necessary  to  keep  in  view  the  fact  that  all  men,  with  the  ex- 
ception of  the  comparatively  few  who  inherit  a  competence, 
are  born,  as  it  were,  into  a  condition  of  natural  bondage  or 
servitude.  Bondage  and  servitude  to  what  ?  To  the  neces- 
sity of  earning  their  living  by  hard  and  continuous  toil. 
"  In  the  sweat  of  thy  brow  shalt  thou  eat  bread  "  has  been 
recorded  as  a  divine  injunction,  and  experience  shows  that 
a  great  majority  of  mankind,  as  the  result  of  long  years  of 
toil,  have  never  hitherto  been  able  to  compass  much  more 
than  a  bare  subsistence.  In  countries  of  even  the  highest 
civilization,  where  the  accumulation  of  wealth  is  greatest 
and  most  equably  divided,  investigation  has  also  led  to  the 
conclusion,  that  ninety  per  cent  at  least  of  the  population 
are  never  possessed  of  sufficient  property  at  the  time  of  their 
demise  to  require  the  services  of  an  administrator. 

If  now,  in  the  course  of  events,  it  has  become  possible, 
through  a  greater  knowledge  and  control  of  the  forces  of 
Nature,  to  gain  an  average  subsistence  with  much  less  of 
physical  effort  than  ever  before,  what  is  the  prospect  thereby 
held  out  to  the  multitude,  who,  to  compass  as  much,  have 
heretofore  been  compelled  to  toil  as  long  as  physical  strength 
and  years  would  permit  ?  The  answer  is,  the  certain  pros- 
pect of  emancipation  from  such  unfavorable  conditions. 
Thus  if  eight  hours'  labor  will  now  give  to  an  individual 
the  subsistence  or  living,  for  the  attainment  of  which  ten, 
twelve,  fourteen,  or  even  more  hours  of  labor  were  formerly 
(but  not  remotely)  necessary,  intelligent  self-interest  would 
seem  to  dictate  to  him  to  work  eight  hours  on  account  of 
subsistence,  and  then  as  many  more  hours  as  opportunity  or 
strength  would  permit ;  and,  out  of  the  gain  for  all  such 
work  not  required  by  necessity,  purchase  his  emancipation 

from  toil  before  age  has  crippled  his  energies ;  or,  if  he  pre- 
20 


446  RECENT  ECONOMIC  CHANGES. 

fers,  let  him  surround  himself  as  he  lives,  in  a  continually 
increasing  proportion,  with  all  those  additional  elements — 
material  and  intellectual — that  make  life  better  worth  liv- 
ing. And,  through  the  rapid  withdrawals  from  the  ranks 
of  competitive  labor,  or  the  increased  demand  for  the  prod- 
ucts of  labor  that  would  be  thus  occasioned,  the  number  of 
the  unemployed,  by  reason  of  lack  of  opportunity  to  labor, 
would  be  reduced  to  a  minimum. 

That  these  possibilities  are  already  recognized  and  ac- 
cepted by  not  a  few  of  the  great  body  of  workers,  is  proved 
by  the  fact  that  the  greater  the  opportunity  to  work  by  the 
piece,  and  the  greater  the  latitude  afforded  to  workmen  to 
control  their  own  time  in  connection  with  earnings,  the 
greater  the  disinclination  to  diminish  the  hours  of  labor.* 
"  No  man,"  says  a  distinguished  American,  who  from  small 
beginnings  has  risen  to  high  position,  "  ever  achieved  emi- 
nence who  commenced  by  reducing  his  hours  of  labor  to  the 
smallest  number  per  day,  and  no  man  ever  worked  very  hard 
and  attained  fortune  who  did  not  look  back  on  his  working 
days  as  the  happiest  of  his  life."  f 

*  A  recent  writer,  in  describing  certain  factories  in  New  England,  where 
the  work  is  mainly  of  this  character,  says :  "  The  days  are  long  for  '  piece- 
work,' and  the  busy  employes  are  indifferent  to  eight-hour  rules.  They 
reserve  only  light  enough  to  Und  their  way  home,  and  at  twilight  they  take 
up  their  line  of  march.  At  present  they  are  earning  from  three  to  five  dollars 
per  day,  according  to  their  capacity."  But,  as  illustrating  further  how  labor 
treats  labor,  it  is  added :  "  The  employe's  are  union  men,  and  they  will  not 
allow  a  single  non-unionist  to  work ;  neither  will  they  permit  any  boy  under 
sixteen  or  any  man  over  twenty-one  years  of  age  to  learn  the  trade." 

t  Another,  whose  life-experience  has  been  similar,  also  thus  aptly  states 
the  case :  "  I  have  often  wondered  how  workers  expect  to  get  on  upon  eight 
hours  a  day.  I  can  not  do  it.  1  have  worked  year  after  year  twelve  hours  a 
day,  and  I  know  men  in  my  vocation  who  have  done  so  fourteen  hours — not 
for  eight  hours'  pay,  but  for  fourteen  hours'  pay.  Let  a  man  who  is  getting 
day  wages  for  day's  work  consider  how  many  hours  there  are  in  the  day. 
Suppose  the  day's  work  is  even  ten ;  allow  two  for  meals — that  makes  twelve ; 
allow  nine  for  sleep  and  dressing,  that  makes  twenty-one.  There  are  three 
hours  a  day  for  getting  on.  That  is  clear  profit.  There  is  room  for  more 
profit  to  himself  in  those  three  hours  than  the  profit  to  the  employer  on  the 


DECLINE  IN  PRICES.  447 

Probably  the  most  signal  feature  of  the  recent  economic 
transitions  has  been  the  extensive  decline  in  the  prices  of 
most  commodities ;  and  as  great  material  interests  have  been 
for  a  time  thereby  injuriously  affected — commodities  at  re- 
duced valuation  not  paying  the  same  amount  of  debt  as  be- 
fore— the  drift  of  popular  sentiment  seems  to  be  to  the 
effect  that  such  a  result  has  been  in  the  nature  of  a  calam- 
ity. Accordingly,  a  great  variety  of  propositions  and  de- 
vices have  been  brought  forward  in  recent  years,  and  have 
largely  occupied  the  attention  of  the  public  in  all  civilized 
countries,  which,  in  reality,  had  for  their  object  not  merely 
the  arrest  of  this  decline,  but  even  the  restoration  of  prices 
to  something  like  their  former  level ;  and  in  such  a  cate- 
gory the  attempt  to  artificially  regulate  the  relative  values 
of  the  precious  metals,  the  increasing  restrictions  on  the 
freedom  of  exchanges,  the  stimulation  of  trade  by  bounties, 
the  formation  of  "trusts,"  "syndicates,"  trade  and  labor 
organizations,  and  the  like,  may  all  be  properly  classed.  But 
all  such  attempts,  as  Dr.  Barth,  of  Berlin,  has  expressed  it, 
"  are  nothing  more  than  designs  to  lengthen  the  cloth  by 
shortening  the  yard-stick."  Decline  and  instability  in  prices, 
if  occasioned  by  temporary  and  artificial  agencies,  are  to  be 
deprecated  ;  but  a  decline  in  prices  caused  by  greater  econ- 
omy and  effectiveness  in  manufacture,  and  greater  skill  and 
economy  in  distribution,  in  place  of  being  a  calamity  is  a 
benefit  to  all,  and  a  certain  proof  of  an  advance  in  civiliza- 
tion. The  mere  fact,  that  the  general  fall  of  prices  which 
has  occurred,  has  been  attended  with  an  almost  simultaneous 
and  universal  increase  in  the  consumption  of  the  necessa- 
ries of  life  and  other  commodities,  is  conclusive  not  only  of 
a  great  improvement  in  the  condition  of  the  masses,  but  also 
that  all  attempts  to  retard  or  reverse  this  movement  by  gov- 
ernmental interference  or  individual  organizations  is  the 

ton  hours  of  hie  working  day.  Throe  hours  a  day  is  eighteen  in  the  week — 
nearly  the  equivalent  of  two  clear  days  in  the  week,  a  hundred  days  in  the 
year." 


448  RECENT  ECONOMIC  CHANGES. 

worst  possible  economic  policy.  In  Great  Britain  alone  the 
decline  in  the  price  of  meats  and  cereals  between  1872  and 
1886  has  been  estimated  to  have  resulted  in  producing  an 
annual  saving  to  each  artisan  consumer  of  $1.95  per  head  in 
meat  and  $3.75  per  head  in  wheat,  or  an  aggregate  on  25,- 
000,000  consumers  of  $142,500,000  per  annum.  At  the 
same  time,  and  very  curiously,  investigations  seem  to  prove 
that  the  aggregate  consumption  of  wheat  and  meats  in 
Great  Britain  has  not  in  recent  years  increased ;  but  such  an 
unexpected  result  will  probably  find  an  explanation  in  the 
circumstance  that  the  increased  earnings  of  the  masses  have 
been  used  for  the  satisfaction  of  a  desire  for  many  commodi- 
ties which  heretofore  they  could  not  gratify,  rather  than  for 
an  increased  consumption  of  breadstuffs  and  meat  products. 
Judged  by  their  fiscal  policies,  most  governments  would 
also  seem  to  regard  a  decline  in  prices,  especially  in  respect 
to  food  products,  as  in  the  nature  of  a  calamity  to  their 
people.  With  the  exception  of  Great  Britain  and  Holland, 
nearly  every  nation — pretending  to  any  degree  of  civilization 
— has  within  recent  years  greatly  increased  its  taxes  on  its 
supply  of  food  from  without,  and  more  especially  on  meats 
and  cereals.  A  comparison  of  the  prices  of  wheat  in  Eng- 
land and  France  for  1886  shows  that  French  consumers 
paid  during  that  year  alone  6s.  3d.  ($1.50)  per  quarter  more 
than  they  would  needs  have  done  for  all  the  wheat  used  by 
them  as  food  in  the  country,  had  the  free  importation  of 
wheat  into  France  been  permitted,  or  about  $37,000,000  on 
their  minimum  aggregate  consumption  for  twelve  months. 
In  March,  1887,  an  increase  in  the  French  duties  on  the  im- 
portation of  wheat  further  increased  its  price  in  France  to 
an  average  of  9s.  8d.  ($2.19)  per  quarter  over  the  correspond- 
ing average  rates  in  England ;  which  difference,  for  the 
ensuing  twelve  months,  must  have  increased  the  aggregate 
cost  of  bread  to  French  consumers  by  the  large  sum  of 
$50,000,000.  France  also  practically  prohibits  the  importa- 
tion of  meats  into  her  territory. 


OLEOMARGARINE  LEGISLATION.  449 

In  1885  the  registered  sales  of  horse-flesh  for  human 
consumption  in  Paris  were  7,662,412  pounds.  In  1886  the 
sales  were  officially  reported  as  having  increased  to  9,001,300 
pounds,  with  an  accompanying  marked  diminution  in  the 
consumption  of  pork.  Whether  there  is  any  necessary  con- 
nection between  the  two  experiences  may  not  be  affirmed, 
but  the  facts  are  suggestive. 

The  attempt  to  crush  out  of  use,  by  legislation,  one  of 
the  most  brilliant  discoveries  of  the  age,  namely,  the  manu- 
facture of  butter  from  the  fat  of  the  ox,  equally  as  whole- 
some as  that  made  from  the  fat  (cream)  of  the  cow,  is  a 
libel  on  civilization ;  and,  as  depriving  the  masses  of  a  better 
article  of  desirable  food  at  cheaper  rates,  than  very  many  of 
them  have  been  accustomed  to  have,  or  can  now  procure, 
would  be  fiercely  resented  by  them,  if  once  properly  and 
popularly  understood.* 

As  it  is,  the  experience  of  the  United  States  in  attempt- 
ing to  enforce  its  so-called  "  oleomargarine  laws  "  well  illus- 
trates the  futility  of  all  attempts  to  permanently  benefit  one 
rival  commercial  interest  at  the  expense  of  another  through 
the  agency  of  discriminating  class  legislation.  Thus,  notwith- 
standing the  enactment  of  a  great  amount  of  legislation  re- 
stricting or  prohibiting  the  manufacture  and  sale  of  oleo- 
margarine by  many  of  the  States  and  the  Federal  Govern- 
ment, the  report  of  the  United  States  Bureau  of  Internal 
Revenue  for  1888  shows  that  the  manufacture  and  consump- 

*  A  report  on  the  subject  of  "  Oleomargarine,"  by  the  Royal  Health  De- 
partment at  Munich,  submitted  March,  1887,  says:  "  This  product  is  made  in 
great  part  from  such  proper  ingredients  as  are  useful  in  nourishment,  namely, 
the  fats  or  greases ;  and  therefore  it  is  of  importance,  as  it  furnishes  to  the 
poorer  classes  a  _  substitute  for  butter  which  is  cheaper  and  at  the  same  time 
nourishing.  Wo  think  that  this  want  has  been  supplied  in  a  most  satisfactory 
manner  by  the  manufacture  of  artificial  butter.  And  it  is  offered  in  the 
markets  in  a  condition  superior  to  natural  butter  as  far  as  cleanliness  and  care- 
ful preparation  are  concerned."  The  conclusions  of  the  chemists  employed 
by  the  United  States  Internal  Revenue  Bureau,  as  the  result  of  their  investiga- 
tions of  this  product,  are  also  to  the  same  effect,  namely,  that  it  is  a  wholesome 
and  unobjectionable  product. 


450  RECENT  ECONOMIC  CHANGES. 

tion  of  this  article  in  response  to  popular  demand  is  steadily 
increasing.  While  the  inspection  laws  of  the  United  States 
were  sufficient  to  enable  its  officials  to  recognize  and  tax  the 
production  during  that  same  year  of  the  great  amount  of 
69,000,000  pounds  of  oleo-oil — "  an  article  produced  for  the 
sole  purpose  of  being  used  in  the  manufacture  of  a  butter 
substitute  " — they  were  not  sufficiently  potent  to  allow  these 
same  officials  to  determine  the  use  which  was  made  of  more 
than  27,000,000  pounds  of  this  same  product;  it  having 
been  neither  exported  nor  used  in  the  manufacture  of  oleo- 
margarine. No  doubt,  however,  was  entertained  that  it 
was  secretly  used  for  the  manufacture  of  some  other  food 
product — such,  for  example,  as  cheese. 

The  fact  that  in  no  country  do  the  masses  ever  experi- 
ence as  much  of  benefit  from  a  fall  of  prices  as  they  would 
seem  to  be  fairly  entitled  to  have,  owing  to  the  great  differ- 
ence between  wholesale  and  retail  rates,  and  that  this  differ- 
ence is  always  greatly  intensified  in  the  case  of  the  poor  who 
purchase  in  small  quantities,  clearly  indicates  one  of  the 
greatest  and  as  yet  least  occupied  fields  for  economic  and 
social  reform.  Flour,  in  the  form  of  bread,  costs  usually 
three  times  more,  when  distributed  to  the  poorer  consumers 
in  cities  of  the  United  States,  than  the  total  aggregate  cost 
of  growing  the  wheat  out  of  which  it  is  made,  milling  it 
into  flour,  barreling,  and  transporting  it  to  the  bakeries. 
The  retail  prices  of  meats  are  enhanced  in  like  manner ;  and 
investigation  some  years  ago  showed  that,  when  anthracite 
coal  was  being  sold  and  delivered  in  New  York  city  for 
$4.50  per  ton,  it  cost  people  on  the  East  and  North  Eivers, 
who  bought  it  by  the  bucketful,  from  $10  to  $14  per  ton. 

While  in  recent  years  the  cost  of  nearly  all  food  products 
in  the  United  States  has  (as  has  been  already  shown)  been 
so  greatly  cheapened  that  their  competitive  supply  has 
reduced  the  value  of  land  in  Europe  and  impoverished  its 
agriculturists,  the  results  of  the  investigations  of  the 
Labor  Bureau  of  Connecticut  prove  that  the  retail  cost  to 


WHOLESALE  AND  RETAIL  PRICES.  451 

the  wage-earners  of  that  State  of  most  of  these  articles  of 
food-supply — which  on  the  average  represents  one  half  of 
their  wages — has,  comparing  the  prices  of  1887  with  those 
of  1860,  greatly  increased;  corn-meal  by  the  barrel,  for 
example,  having  advanced  forty  per  cent,  and  butter  from 
thirty-five  to  fifty  per  cent. 

Similar  results  are  noticed  in  all  other  countries.  Out 
of  every  £100  paid  by  the  consumers  of  milk  in  London, 
Sir  James  Caird  estimates  that  not  more  than  £30  finds  its 
way  into  the  hands  of  the  English  dairy  farmers  who  in  the 
first  instance  supply  it.  In  the  case  of  some  varieties  of 
fish — mackerel — the  cost  of  inland  distribution  in  England 
has  been  reported  to  be  as  high  as  four  hundred  per  cent  in 
excess  of  the  price  paid  to  the  fishermen.  Eggs  collected 
from  the  farmers  in  Normandy  are  sold  according  to  size  to 
Parisian  consumers,  at  an  advance  in  price  of  from  eighty- 
two  to  two  hundred  per  cent. 

The  experience  of  different  countries  in  respect  to  the 
difference  in  the  retail  and  wholesale  prices  of  staple  com- 
modities is  not,  however,  uniform ;  the  most  notable  excep- 
tion perhaps  being  that  American  beef,  flour,  bread,  butter, 
and  cheese  are,  as  a  rule,  sold  more  cheaply  at  retail  in  Lon- 
don than  in  New  York. 

The  payment  of  rent  is  believed  by  not  a  few  to  be  the 
chief  cause  of  social  distress,  and  a  continual  draught  on 
the  resources  of  the  poor,  for  which  no  adequate  equivalent 
is  returned.  And  yet  investigations  similar  to  those  (before 
noticed)  which  have  demonstrated  how  small  needs  be  the 
first  cost  of  the  food  essentials  of  a  good  living,  have  also 
led  to  the  opinion  that  "not  much  more  than  half  the 
money  that  men  usually  pay  for  rent  would,  if  expended  in 
the  right  direction  and  under  easily  prepared  guarantees, 
give  them  possession  of  good  homes,  protected  in  all  the 
rights  given  by  a  title  in  fee  simple,  and  which  they  could 
transmit  unencumbered  to  their  families." 

Co-operative  associations  have  done  something  in  the 


452  RECENT  ECONOMIC  CHANGES. 

way  of  remedying  the  evils  resulting  from  unfair  and  un- 
necessary enhancements  of  prices  to  consumers  buying  at 
retail  or  in  small  quantities ;  but  as  yet  the  success  that  has 
attended  their  efforts  in  this  direction,  although  promising, 
has  been  partial  and  incomplete.  Associations  of  this  char- 
acter appear  to  find  much  more  of  popular  favor  and  sup- 
port in  England  than  in  the  United  States ;  and,  probably, 
for  the  reason  that  the  great  establishments  which  have 
sprung  up  in  recent  years  at  almost  all  the  considerable  cen- 
ters of  population  in  the  United  States  for  the  sale  of  non- 
perishable  commodities,  and  which  are  systematically  con- 
ducted on  the  economic  basis  that  large  sales  with  relatively 
small  profits  ultimately  assure  the  largest  aggregate  of  profits, 
sell  goods  of  the  character  indicated  at  relatively  lower  retail 
prices  than  generally  prevail  in  England,  and  so  limit  the 
sphere  of  beneficial  operation  of  the  American  co-operative 
societies.* 

*  "  Co-operation  is  an  excellent  thing,  tut  society  will  not  be  regenerated 
because  thousands  of  decent  men  have  the  sense  to  see  that  if  they  combine 
to  buy  leather  wholesale,  and  to  purchase  boots  for  themselves,  they  will  get 
their  boots  good  and  cheap.  Even  if  the  principle  were  applicable  to  every- 
thing, society  would  only  be  a  little  more  comfortable,  and  it  is  not  applicable 
to  everything.  Every  man  is  not  the  stronger,  as  all  co-operators  affirm,  be- 
cause he  is  one  of  a  crowd,  and  there  are  some  operations,  swimming,  for  ex- 
ample, in  which  to  be  untouched  by  others  is  a  condition  of  success.  As  to 
extinguishing  that  evil  spirit,  competition,  it  is  not  extinguished  or  threatened 
by  co-operation,  for  if  the  societies  became  numerous  they  would  compete 
with  one  another,  and  the  competition  of  corporations  is  the  severest  of  all. 
Indeed,  if  they  did  not,  the  world  would  be  much  injured.  Some  co-operators 
dream  a  dream  of  a  co-operative  society  growing  so  large  as  to  monopolize 
business,  but,  supposing  that  dream  realized,  business  would  be  badly  done. 
Everybody  would  grow  lazy,  the  goods  would  deteriorate  in  quality,  prices 
would  become  larger,  and  by-and-by  some  philanthropic  co-operators,  purely 
in  the  public  interest,  would  be  compelled  to  revolt  and  set  up  competition 
again.  fHuman  nature  can  conquer  the  temptation  to  dishonesty,  but  it  never 
can  conquer  the  disposition  to  take  its  ease,  and,  if  it  is  to  strain  itself  and 
always  do  its  best  in  business  or  anything  else,  it  needs  a  heavy  whip.  No 
whip  has  ever  been  discovered  so  effective  as  competition,  and  if  it  were  dis- 
pensed with,  the  human  race,  even  if  happier,  would  be  less  vigorous  and  less  , 
prone  to  make  steady  advance  toward  more  perfect  work  its  rule  of  life." — J 
London  Economist.  *~ 


PRICES  AND  POVERTY.  453 

The  relation  between  prices  and  poverty  has  long  at- 
tracted attention,  and  nothing  new  in  the  way  of  theory 
remains  to  be  offered.     Three  thousand  or  more  years  ago, 
a  certain  wise  man,  who  had  sat  at  the  marts  of  trade,  and 
made  himself  conversant  with  the  nature  of  wholesale  and 
retail  transactions,  embodied  in  the  following  short  and  sim- 
ple sentence  as  much  in  the  way  of  explanation  of  their  in- 
volved phenomena  as  the  best  results  of  modern  science  will 
/probably  ever  be  able  to  offer,  namely — "  The  destruction  \ 
I  of  the  poor  is  their  poverty" — Proverbs,  10th  chapter,  15th  I 
\wrse.     Something  in  the  way  of  a  real  contribution  to  our 
general  understanding  of  this  subject  would,  however,  seern 
to  be  found  in  the  recent  observation  tha^he  valuerperceiyN 
ing  sense  or  fjcji&y  is  not  implanted  by  Nature  in  every  r-\ 
person,  but  differs  widely  in  different  races  and  families ;  vU^i 
and  that  "  he  who  has  it  will  accumulate  wealth  with  com-       /* 
paratively  slight  exertion,  while  he  who  has  it  not  will  not  gain 
it,  no  matter  how  energetically  he  labors."  *    Illustrations 
of  this  are  familiar  to  every  student  and  investigator  of  social  r" 
science ;  but  the  following  one  seems  especially  worthy  of 
record :   On  the  ferries  between  New  York  and  Brooklyn, 
the  rates  of  toll  were  some  years  ago  reduced  nearly  one  half 
to  all  who  would  buy  at  one  time  (or  at  wholesale)  fifty 
cents'  worth  of  tickets.     But  it  was  soon  noticed  that  the 
working-classes,  who  at  morning  and  evening  constituted 
the  bulk  of  the  travel,  rarely  bought  tickets,  while  they  were 
bought  as  a  rule  by  those  who  belonged  to  banking  and 
mercantile  establishments."  f        ^ 

*  "  The  Labor-Value  Fallacy,"  by  M.  L.  Scuddgx.    Chicago,  1886. 

t  "  No  one  familiar  with  business  lite  would  question  the  special  ability  of 
German  Jews  in  all  business  which  requires  a  comprehension  of  finance,  as 
well  as  in  all  mercantile  pursuits.  They  do,  no  doubt,  outstrip  Englishmen 
very  frequently,  almost  as  frequently  as  they  outstrip  Germans  in  Berlin  or 
Vienna.  In  the  race  for  wealth,  as  a  result  of  trade,  they  have  probably  dis- 
tanced all  mankind,  and  the  English  bankers  can  no  more  contend  with  the 
Bothschilds  in  London  or  Paris  than  the  Parsee  traders  can  compete  in  Bom- 
bay with  the  great  Jew  house  of  Sassoon.  But  then,  not  to  mention  the  spe- 


4:54:  RECENT  ECONOMIC  CHANGES. 

The  countries  of  the  world  which  within  the  last  third 
of  the  century  have  made  the  greatest  material  progress  are 
the  United  States,  Australia,  and  the  States  of  the  Argentine 
Eepublic.  This  has  been  due  largely  in  all  these  cases  to  the 
vast  abundance  of  cheap  and  fertile  land,  which  has  occa- 
sioned and  made  possible  a  great  increase  in  population. 
Like  conditions  have  been  similarly  influential  in  increasing 
the  population  of  Russia  in  a  more  rapid  ratio  than  in  most 
of  the  other  countries  of  Europe.  The  United  States,  by 
reason  of  its  great  natural  resources,  and  extensive  use  of 
machinery  and  consequent  ability  to  control  the  supply  and 
the  price  of  many  of  the  great  staple  articles  of  the  world's 
consumption — cotton,  cereals,  meats,  tobacco,  petroleum,  and 
silver — is  at  present  the  great  disturbing  factor  in  the  world's 
economic  condition. 

In  Australia,  the  recent  increase  in  population  and  wealth 
is  extraordinary,  and  finds  a  parallel  only  in  the  past  experi- 
ence of  the  United  States.  During  the  year  1887  the  in- 
crease of  the  population  of  all  the  colonies,  including  New 
Zealand,  was  three  and  a  half  per  cent  over  that  of  1886.  At 
the  present  rate  of  increase,  the  inhabitants  of  Australia  at 
or  before  the  close  of  the  next  century  will  number  about 
190,000,000 ;  and  constitute  no  inconsiderable  part  of  the 
population  of  the  world.  That  the  increase  of  wealth  in 
these  colonies  is  also  increasing  even  faster  than  the  increase 

cial  aptitudes  of  Jews  for  trading,  the  result  of  the  unjust  persecution  of  cent- 
uries which  has  closed  all  other  careers  to  them,  the  Jews  are  for  the  most 
part  taught  business  very  early  as  a  method  of  making  money,  but  are  not 
required  to  put  any  intellectuality  into  it.  Though  often  intellectual  men, 
their  intellect  usually  manifests  itself  outside  their  business,  which  they  con- 
duct with  skill  indeed,  but  without  any  special  display  of  mind.  Some  of  the 
most  successful  among  them  have  been  very  ignorant  men,  and  almost  all 
have  succeeded  rather  by  virtue  of  a  sort  of  faculty  of  accumulation  and  atten- 
tion to  the  uses  of  money  than  by  any  display  of  what  would  be  deemed  in- 
tellectual power  in  business.  They  know,  as  we  once  heard  it  described,  the 
'  smell  of  the  markets ' — that  is,  their  tendency  toward  rising  or  falling,  and 
they  seek  carefully  for  profit ;  but  it  is  by  business  aptitude  rather  than  cult- 
ure that  they  achieve  their  highest  results." — London  Economist. 


THE  ARGENTINE  REPUBLIC.  455 

of  population,  is  claimed  to  be  shown  by  comparing  the 
average  amount  left  by  each  person  dying  in  Victoria  in  the 
years  1872-1876  with  similar  bequeathed  possessions  during 
the  years  1877-1881  and  1882-1886,  it  being  assumed  that 
the  average  amount  left  by  each  person  dying  is  equivalent 
to  the  average  amount  possessed  by  each  person  living.  On 
this  basis,  the  national  wealth  amounted  to  £185  ($899)  per 
head  in  the  five  years,  1872  to  1876 ;  to  £223  ($1,083)  in  the 
five  years,  1877  to  1881 ;  and  to  £305  ($1,482)  in  the  five 
years,  1882  to  1886.  This  wealth,  however,  is  not  accumu- 
lated in  the  hands  of  the  few,  but  is  tolerably  wide-spread ; 
nineteen  and  a  half  per  cent  of  the  population  having  savings- 
banks  deposits.  The  average  rate  of  wages  is  also  higher  in 
Australia  than  in  any  other  country. 

In  the  Argentine  Republic,  during  the  twenty-five  years 
next  preceding  1888,  the  population  increased  in  a  ratio 
nearly  double  that  of  the  United  States ;  while  the  increase 
in  the  value  of  its  landed  property  since  1882  is  estimated 
at  fifty  per  cent.  About  forty-five  hundred  miles  of  rail- 
roads were  in  operation  within  the  territory  of  the  republic 
on  the  1st  of  January,  1889,  with  a  large  number  of  addi- 
tional miles  under  contract.  Sleeping-cars  now  run  regu- 
larly from  the  Atlantic  Ocean  to  the  foot-hills  of  the  Andes ; 
and  the  completion  of  a  through  line  from  ocean  to  ocean, 
saving  five  thousand  miles  of  ocean  navigation  around  the 
extremity  of  the  continent,  is  a  near  certainty.  In  1878 
the  exports  of  wheat,  maize,  and  linseed  from  the  republic 
were  reported  as  aggregating  only  213  tons;  in  1887  the 
aggregate  was  632,700  tons.  Patagonia,  which  is  in  great 
part  included  in  the  territory  of  the  republic,  and  which 
only  a  few  years  since  appeared  in  our  geographies  as  a 
dreary  and  uninhabitable  waste,  has  developed  into  the  rich- 
est of  pastures,  with  immense  possibilities  for  supplying  the 
world  with  meat  and  other  desirable  animal  products — wool, 
hides,  and  skins. 

The  immense  change  which  has  taken  place  in  the  eco- 


456  RECENT  ECONOMIC  CHANGES. 

nomic  condition  of  India  in  recent  years  is  also  a  matter  of 
profound  interest  and  importance.  The  India  of  antiquity, 
so  far  as  its  relations  to  Europe  were  concerned,  has  been 
not  unfitly  described  as  a  "  dealer  in  curiosities,"  and,  under 
the  rule  and  administration  of  the  East  India  Company, 
"  as  a  retail  trader  in  luxuries."  But  India  under  British 
dominion  has  become  a  wholesale  exporter  of  food  products, 
seeds,  and  fibers,  and  is  becoming  a  manufacturer  on  a  large 
scale  on  its  own  account.  In  1834  the  value  of  the  aggre- 
gate exports  of  India  was  reported  at  £9,500,000  ($46,170,- 
000) ;  in  1887  this  aggregate  had  increased  to  £92,000,000 
($447,000,000).*  In  1865  the  manufacture— spinning  and 
weaving — of  cotton  by  machinery  was  very  inconsiderable. 
In  1878-'79  the  India  mill  consumption  of  cotton  was  only 
268,000  bales  (of  392  pounds  each) ;  in  1887-'88  it  was  815,- 
000  bales,  an  increase  in  a  decade  of  two  hundred  and  four 
per  cent.  The  history  of  commerce  can  also  show  no  parallel 
to  the  recent  growth  of  the  export  trade  of  India  in  the 
item  of  cotton  yarns  of  her  own  manufacture ;  and  the 
period  may  therefore  be  not  far  distant  when  India,  if 
this  department  of  her  trade  and  industry  continues  to 
expand,  will  be  under  the  necessity  of  importing  raw 
cotton,  in  place  of  exporting  it,  as  she  has  done  for 
centuries.  Another  interesting  feature  of  this  change  in 
economic  conditions  is,  that  whereas  India,  down  to  -a 
comparatively  recent  period,  insisted  upon  being  paid  for 
her  commodities  in  the  precious  metals — largely  silver — her 
foreign  trade  to-day,  as  is  the  case  with  other  great  com- 
mercial nations,  consists  mainly  in  the  interchange  of  com- 
modities exclusive  of  the  precious  metals,  and  with  the 
minimum  use  of  money. 

But  of  all  old  countries,  England,  considered  as  the  rep- 
resentative of  the  United  Kingdom,  leads  in  all  that  per- 

*  "  Statistical  Abstract  for  the  Colonial  Possessions  of  the  United  King- 
dom," 1888. 


PROGRESS  OF  GREAT  BRITAIN.  457 

tains  to  civilization ;  and,  making  allowance  for  the  excep- 
tional advantages  enjoyed  by  the  United  States  and  Aus- 
tralia, her  relative  progress  has  probably  been  as  great  as 
that  of  any  country.  In  no  one  of  the  countries  of  Europe 
has  the  increase  of  population  been  greater,  and  in  Italy, 
Germany,  and  Russia  only  has  there  been  an  approximate 
increase ;  and  this  result  has  been  especially  remarkable,  in- 
asmuch as  for  many  years  England  has  not  had  an  acre  of  vir- 
gin soil  to  expand  upon.  In  no  country  of  Europe,  further- 
more, has  the  increase  of  population  been  probably  so  largely 
accompanied  by  an  increase  in  comfort  as  in  England. 
Forty  years  ago  the  United  Kingdom  owned  only  about  one 
third  of  the  world's  shipping.  Now  it  probably  owns  about 
seven  twelfths,  and  of  the  existing  steam-tonnage  it  owned 
seventy-two  per  cent  (in  1887).  In  respect  to  exports  and 
imports — comparisons  being  made  per  capita — no  other 
nation  approximates  Great  Britain  in  its  results  to  an  extent 
sufficient  to  fairly  justify  a  claim  in  its  behalf  to  the  hold- 
ing of  a  second  place.* 

In  every  movement  in  recent  years  toward  a  material 
betterment  of  the  masses  through  reduction  of  the  hours  of 
labor,  compulsory  education  of  children,  advancing  wages, 
acts  regulating  the  payment  of  wages,  factory  and  mine 
inspection,  extermination  of  diseases  and  reduction  of  the 
death-rate,  cheap  postage,  diminishing  the  risks  of  ocean 
navigation  as  to  both  life  and  property,  establishing  co- 
operative institutions,  and  the  like,  England  has  led  the 
way.  In  no  other  of  the  leading  industrial  nations  are  the 
deposits  of  savings-banks  and  provident  associations  increas- 

*  "  At  the  present  moment  the  foreign  trade  of  England — imports  and  ex- 
ports together,  including  the  transit  trade — is  in  round  figures  £750,000,000 
per  annum,  about  £20  per  head  of  the  population.  In  Franco  the  correspond- 
ing figures  are  £429,000,000,  and  £12  per  head ;  in  the  United  States,  £306,- 
000,000,  and  £6  per  head ;  in  Germany,  £488,000,000,  and  £11  per  head ;  in 
Russia,  £160,000,000,  and  £1  10s.  per  head ;  in  Austria-Hungary,  £143,000,- 
000,  and  £3  10s.  per  head;  in  Italy,  £100,000,000,  and  £8  10s.  per  head;  and 
eo  of  other  nations." — ROBERT  GIFFEN,  Letter  to  the  London  7imea,  1884. 


458  RECENT  ECONOMIC  CHANGES. 

ing  more  rapidly,  or  the  benefits  of  life  and  health  insurance 
so  widely  extended,  or  more  attention  given  or  greater  com- 
parative expenditures  made  in  behalf  of  education,  or  so 
small  an  amount  of  crime  in  proportion  to  population,  or  in 
which  pauperism  is  so  rapidly  diminishing,*  or  where 
greater  progress  is  acknowledged  in  respect  to  the  equal 
distribution  of  wealth.  In  1837  the  national  debt  of  Eng- 
land amounted  to  19-5  per  cent  of  the  national  wealth ;  in 
1880  it  amounted  to  only  8'8  per  cent.  "With  the  exception 
of  the  United  States,  England  is  the  only  other  great  nation 
that  is  reducing  its  national  debt ;  and  notwithstanding  the 
continuance  of  an  antiquated  and  unequal  system  of  land 
tenure,  and  rigidly  defined  lines  of  social  organization,  Eng- 
land is  the  one  highly  civilized  country  in  which  the  doc- 
trines of  socialism  have  made  the  least  progress.  Wherever 
and  whenever  England  now  acquires  new  territory  she 
establishes  commercial  liberty,  and  neither  claims  nor  exer- 
cises any  privilege  of  trade  which  she  does  not  equally  share 
with  the  people  of  all  other  countries.  Under  her  recent 
rale  India  is  experiencing  an  industrial  awakening  which 
finds  no  parallel  in  her  previous  history — threatening  the 
supremacy  of  China  in  respect  to  the  world's  supply  of  tea, 
the  United  States  in  respect  to  the  supply  of  wheat,  and 
Lancashire  (England)  in  the  manufacture  and  exports  of  cot- 
ton fabrics,  f  In  1884  Great  Britain  virtually  took  possession 
of  Egypt,  and  from  that  moment  there  was  initiated,  under 
the  management  of  a  body  of  skilled  engineers  and  practical 

*  "  We  are  prone  (in  the  United  States)  to  bewail  the  condition  of  the 
English  laborer  and  lament  the  existence  of  pauperism  in  England,  but  the 
official  figures  certainly  do  not  warrant  much  self-gratulation.  It  may  be 
that  English  private  benefactions  far  exceed  our  own  in  amount,  but  the  fact 
remains  that  the  English  Government  aids  fewer  paupers,  proportionately  to 
population,  than  our  own." — CAKBOLL  D.  WRIGHT. 

+  No  country  in  the  world  can  point  to  such  remarkable  figures  as  India 
can  in  her  export  trade  in  cotton  yarns.  In  eleven  years — i.  e.,  from  1877  to 
to  1888— the  shipments  rose  from  about  7,000,000  pounds  to  over  113,000,000 
pounds. 


POSSIBLE  FUTURE  OP  SILVER.  459 

men,  a  renovation  of  the  water-supply  and  irrigation  system 
of  the  country  upon  which  the  life  and  prosperity  of  its 
people  depend,  and  which  has  already  been  attended  with 
results  of  extraordinary  beneficence.  In  Lower  Egypt  land 
reclamation  is  going  on  at  the  rate  of  fifty  thousand  acres 
per  annum,  and  in  other  sections  of  the  Nile  Valley  at 
double  that  amount;  giving  to  a  down-trodden  and  im- 
poverished race  better  opportunities  than  they  have  had  for 
centuries  of  supporting  themselves  by  their  own  labor. 
Formerly  one  or  two  hundred  thousand  of  the  wretched 
fellaheen  were  annually  torn  from  their  homes  and  forced 
to  labor  for  months  in  clearing  out  the  canals  of  mud  and 
ooze,  without  pay  and  with  an  insufficient  supply  of  the 
poorest  food.  Under  English  management  this  system  of 
slavery  has  been  practically  abolished,  and  the  laborers  are 
now  paid  wages  or  allowed  to  buy  their  exemption  from 
work  for  a  very  small  sum. 

Something  of  inference  respecting  the  economic  changes 
of  the  future  may  be  warranted  from  a  study  of  the  past. 
It  may,  for  example,  be  anticipated  that  whatever  of  eco- 
nomic disturbance  has  been  due  to  a  change  in  the  relative 
value  of  silver  to  gold,  will  ultimately  be  terminated  by  a 
restoration  of  the  bullion  price  of  the  former  metal  to  the 
rates  (sixty  to  sixty-one  pence  per  ounce)  that  prevailed  for 
many  years  prior  to  the  year  1873.  The  reasons  which 
warrant  such  an  opinion  are  briefly  as  follows  : 

Silver  is  the  only  suitable  coin  medium  for  countries  of 
comparatively  low  prices,  low  wages,  and  limited  exchanges, 
like  India,  China,  Central  and  South  America,  which  repre- 
sent about  three  fifths  of  the  population  of  the  world,  or 
about  a  thousand  millions  of  people.  Civilization  in  most 
of  these  countries,  through  the  advent  of  better  means  of 
production  and  exchange,  is  rapidly  advancing — necessitating 
a  continually  increasing  demand  for  silver  as  money,  as  well 
as  of  iron  for  tools  and  machinery.  Generations  also  will  pass 
before  the  people  of  such  countries  will  begin  to  economize 


460  RECENT  ECONOMIC  CHANGES. 

money  by  the  use  to  any  extent  of  its  representatives — paper 
and  credit.  Under  such  circumstances  a  scarcity,  rather 
than  a  superabundant  supply  of  silver,  in  the  world's  market, 
is  the  outlook  for  the  future,  inasmuch  as  a  comparatively 
small  per  capita  increase  in  the  use  of  silver  by  such  vast 
numbers  would  not  only  rapidly  absorb  any  existing  surplus, 
but  possibly  augment  demand  in  excess  of  any  current  sup- 
ply.* The  true  economic  policy  of  a  country  like  the 
United  States,  which  is  a  large  producer  and  seller  of  silver, 
would  therefore  seem  to  be,  to  seek  to  facilitate  such  a  result, 
by  removing  all  obstacles  in  the  way  of  commerce  between 
itself  and  silver-using  countries,  in  order  that,  through  in- 
creased traffic  and  consequent  prosperity,  the  demand  for 
silver  on  the  part  of  the  latter  may  be  promoted. 

The  great  reduction  in  the  cost  of  transportation  of  com- 
modities has  been  one  of  the  most  striking  features  of  recent 
economic  history;  and  how  essential  this  reduction  has 
been,  and  is,  to  the  achievement  and  maintenance  of  the 
present  conditions  of  civilization,  may  be  inferred  from  the 
circumstance  that  "  it  takes  an  annual  movement  of  about 
a  thousand  tons  one  mile  to  keep  alive  each  inhabitant  of 
the  United  States."  Produce  is  now  carried  from  Australia 
to  England,  a  distance  of  eleven  thousand  miles,  in  less  time 
and  at  less  cost  than  was  required  a  hundred  years  ago  to 
convey  goods  from  one  extremity  of  the  British  Islands  to 

*  According  to  statements  submitted  to  the  Royal  (English)  Commission 
on  Trade  Depression,  "  The  quantity  of  pure  silver  used  for  coinage  purposes, 
during  the  fourteen  years  ending  1884,  was  about  eighteen  per  cent  greater 
than  the  total  production  during  that  period ;  and  there  are  other  estimates 
which  place  the  consumption  at  a  still  higher  figure.  It  is  to  be  remembered 
that  the  coinage  demand  is  fed  from  other  sources  than  the  annual  output  of 
the  mines.  It  is  supplied  to  some  extent  by  the  melting  down  of  old  coinage. 
Allowing  for  this,  however,  the  evidence  of  statistics  goes  to  show  that  the 
coinage  demand  for  the  metal  is,  and  has  been,  sufficient  to  absorb  the  whole 
of  the  annual  supply  that  is  left  free  after  the  consumption  in  the  arts  and 
manufactures  has  been  supplied ;  and  this  conclusion  is  supported  by  the  fact 
that  nowhere  throughout  the  world  has  there  been  any  accumulation  of  un- 
coined stocks  of  the  metal." — London  Economist. 


FUTURE  TRADE  OF  THE  EAST.  461 

the  other.  The  average  cost  of  transporting  each  ton  of 
freight  one  mile  on  the  Pennsylvania  Eailroad  during  the 
year  1887  was  fflfo  of  a  cent.  At  first  thought  it  would 
seem  as  if  improvement  in  this  sphere  of  human  effort  had 
certainly  found  a  limit ;  but  there  are  reasons  for  believing 
that  even  greater  reductions  are  possible.  Apart  from  im- 
provements in  machinery,  and  greater  economies  in  operat- 
ing, very  few  of  the  great  lines  of  transportation,  especially 
the  railways,  have  as  yet  sufficient  of  business  to  continuously 
exhaust  their  carrying  capacity  ;*  but,  when  this  is  effected, 
and  the  present  ratio  of  a  large  class  of  fixed  expenditures 
to  business  is  thereby  diminished,  lower  rates  for  freight, 
from  this  cause  alone,  will  be  permissible;  all  of  which, 
however,  is  simply  equivalent  to  reaffirming  the  old  trade 
maxim,  that  it  costs  proportionately  less  to  do  a  large  than  a 
small  business. 

An  anticipation  of  an  immense  increase  in  the  near 
future,  in  the  commerce  between  the  countries  of  the  western 
and  eastern  hemispheres,  owing  especially  to  the  introduc- 
tion into  the  latter  of  better  methods  for  effecting  exchanges 
and  transmitting  information,  is  certainly  warranted  by 
recent  experiences.  Thus,  if  the  trade  between  the  United 
Kingdom  alone  and  the  leading  countries  of  the  East,  ex- 
clusive of  India,  continues  to  increase  in  the  next  quarter  of 
a  century  in  the  same  ratio  as  it  has  during  the  last  quarter, 
when  commercial  facilities  were  much  less  than  at  present, 
its  aggregate  value  of  $190,000,000  in  1860,  and  $427,000,000 
in  1885,  will  swell  to  over  $1,000,000,000  in  the  year  1910 ; 
and,  beyond  that  date,  to  an  amount  that  must  be  left  to 
the  imagination. 

That  the  only  possible  future  for  agriculture,  prosecuted 
for  the  sake  of  producing  the  great  staples  of  food,  is  to  be 
found  in  large  farms,  worked  with  ample  capital,  especially 

*  During  the  year  1887  the  mileage  of  empty  freight-cars  on  the  Chicago, 
Milwaukee  and  St.  Paul  Railroad  was  reported  at  81,210,749,  or  more  than 
one  third  of  the  total  mileage  run  by  loaded  freight-cars. 


4:62  RECENT  ECONOMIC  CHANGES. 

in  the  form  of  machinery,  and  with  labor  organized  some- 
what after  the  factory  system,  is  coming  to  be  the  opinion 
of  many  of  the  best  authorities,  both  in  the  United  States 
and  Europe.  As  a  further  part  of  such  a  system,  it  is 
claimed  that  the  farm  must  be  devoted  to  a  specialty  or  a 
few  specialties,  on  the  ground  that  it  would  be  almost  as 
fatal  to  success  to  admit  mixed  farming  as  it  would  be  to 
attempt  the  production  of  several  kinds  of  diverse  manu- 
factures under  one  roof  and  establishment. 

Machinery  is  already  largely  employed  in  connection 
with  the  drying  and  canning  of  fruit  and  vegetables,  and  in 
the  manufacture  of  wine.  In  the  sowing,  harvesting,  trans- 
porting, and  milling  of  wheat,  its  utilization  has  reached  a 
point  where  further  improvement  would  seem  to  be  almost 
impossible.  In  the  business  of  slaughtering  cattle  and  hogs, 
and  rendering  their  resulting  products  available  for  food 
and  other  useful  purposes,  the  various  processes,  involving 
large  expenditure  and  great  diversity  of  labor,  especially  in 
"  curing,"  succeed  each  other  with  startling  rapidity,  and 
are,  or  can  be,  all  carried  on  under  one  roof,  and  on  such  a 
scale  of  magnitude  and  with  such  a  degree  of  economy  that 
it  is  said  that,  if  the  entire  profits  of  the  great  slaughtering 
establishments  were  limited  to  the  gross  receipts  from  the 
sale  of  the  beef-tongues  in  the  one  case  and  the  pigs'  feet  in 
the  other,  the  returns  on  the  capital  invested  and  the  busi- 
ness transacted  would  be  eminently  satisfactory.  It  is  not, 
however,  so  well  known  that  the  business  of  fattening  cattle 
by  the  so-called  "  factory  system,"  on  a  most  extensive 
scale,  has  also  been  successfully  introduced  in  the  North- 
western and  trans- Mississippi  States  and  Territories,  and 
that  great  firms  have  at  present  thousands  of  cattle  gathered 
under  one  roof,  and  undergoing  the  operation  of  fattening 
by  the  most  continuous,  effective,  and  economic  processes. 
The  results  show  that  one  laborer  can  take  care  of  two  hun- 
dred steers  undergoing  the  process  of  grain-feeding  for  the 
shambles,  in  a  systematic,  thorough  manner,  with  the  ex- 


IMPROVED  TREATMENT  OF  CATTLE.      463 

penditure  of  much  less  time  and  labor  per  day  than  the 
ordinary  farmer  spends  in  tending  fifteen  or  twenty  head  of 
fattening  steers  under  the  disadvantages  common  upon  the 
ordinary  farms.  In  these  mammoth  establishments  "  a 
steam-engine  moves  the  hay  from  one  large  barn  to  another, 
as  needed,  by  means  of  an  endless  belt,  and  carries  it  to  a  pow- 
erful machine  where  it  is  cut  into  lengths  suitable  for  feed- 
ing, and  afterward  carries  the  cut  hay  by  other  belts  to  the 
mixing-room  where  by  means  of  another  machine  it  is  mixed 
with  corn-meal,  the  corn  having  been  previously  shelled  and 
then  ground  on  the  premises  by  power  from  the  same  en- 
gine. Again,  the  mixed  feed  is  carried  automatically  to  the 
feed-boxes  in  the  stalls.  The  same  engine  pumps  the  water 
for  drinking,  which  runs  in  a  long,  shallow  trough  within 
reach  of  the  steers  ;  and  even  the  stalls  are  cleaned  by  water 
discharged  through  a  hose,  the  supply  being  raised  by  the 
engine  and  stored  for  use.  The  steers  are  not  removed  from 
the  stalls  in  which  they  are  placed  from  the  time  the  fat- 
tening process  is  begun  until  they  are  ready  for  transporta- 
tion to  the  big  establishments  above  mentioned  for  system- 
atic slaughtering.  The  advantages  of  such  establishments 
are  not,  moreover,  confined  to  labor-saving  expedients  merely. 
The  uniformity  of  temperature  secured  through  all  kinds  of 
weather  is  equivalent  to  a  notable  saving  of  feed ;  for  where 
fluctuations  of  temperature  are  extreme  and  rapid,  and  not 
guarded  against,  "  a  great  deal  of  the  grain  which  the  farmer 
feeds  is  *  blown  away '  after  having  been  consumed  by  his 
stock,"  in  form  of  vital  heat,  strength,  and  growth,  which 
are  the  products  of  the  conversion  of  the  grain  on  diges- 
tion.* 


*  It  has  been  found  that  the  present  usual  method  adopted  on  Western 
farms  of  feeding  grain,  especially  corn,  without  previous  grinding,  is  most 
costly,  as  the  grain  in  its  natural  condition  is  imperfectly  digested.  Another 
serious  objection  to  the  imperfect  methods  of  the  ordinary  farm  in  grain- 
feeding  is,  that  the  grain  is  fed  in  a  too  concentrated  form  ;  the  fact  being 
unknown,  or  disregarded,  that  the  thrift  of  the  fattening  animal  depends 


464:  RECENT  ECONOMIC  CHANGES. 

How  great  a  revolution  in  the  business  of  agriculture  is 
yet  to  be  effected  by  the  cultivation  of  land  in  large  tracts, 
with  the  full  use  of  machinery  and  under  the  factory-sys- 
tem, is  matter  for  the  future  to  reveal ;  but  it  can  not  be 
doubted  that  the  shiftless,  wasteful  methods  of  agriculture, 
now  in  practice  over  enormous  areas  of  the  earth's  surface, 

largely  on  the  intimate  admixture  of  ground  grain  with  coarse  forage ;  and 
that  hay,  also,  must  be  chopped,  and  more  thoroughly  intermingled  with  it, 
for  the  attainment  of  the  best  results.  But  the  chopping  of  the  hay  and  straw 
and  the  mixing  with  meal  and  water  are  laborious  operations,  and  hence  the 
economy  of  applying  the  steam-engine,  and  thus  saving  labor  in  the  business 
of  feeding.  Another  saving  is  in  building  materials  :  the  larger  the  structure 
in  which  the  machinery,  the  hay  and  grain,  and  the  animals  are  kept,  the  less 
the  proportionate  quantity  of  lumber  needed ;  and  then,  again,  in  such  an 
establishment,  temperature  and  ventilation,  which  in  ordinary  farming  are 
matters  that  receive  little  attention,  are  economically  and  effectively  regulated. 
An  American  practical  farmer,  the  owner  and  manager  of  seven  thousand 

acres  (Mr.  H.  H ,  of  Nebraska),  to  whom  the  writer  is  indebted  for  many 

items  of  information,  communicates  the  following  additional  review  of  this 
subject  from  the  American  (Western)  standpoint:  "The  average  Western 
farm  is  now  recklessly  managed,  but  capital  will  come  in  greater  volume  and 
set  up  processes  which  will  displace  these  wasteful  methods.  The  revolution 
is  certain,  even  if  the  exact  steps  can  not  now  be  precisely  indicated.  At 
present  the  hay,  and  much  of  the  grain,  and  nearly  all  of  the  tools  and  imple- 
ments, are  unsheltered ;  and  more  than  fifty  per  cent  of  the  hay  is  ruined  for 
a  like  reason,  while  the  animals  themselves  (I  do  not  mean  now  on  the  wild- 
stock  ranges,  but  even  on  the  trans-Missouri  farms)  have  no  roof  over  their 
heads,  except  the  canopy  of  heaven,  with  the  mercury  going  occasionally 
twenty  and  even  thirty  degrees  below  zero.  These  wasteful  methods  in  farm- 
ing are  in  part  promoted  by  the  United  States  homestead  law,  and  the  occu- 
pation of  the  hitherto  inexhaustible  expanse  of  cheap  lands.  When  the  igno- 
rant, degraded,  and  impecunious  can  no  longer  acquire  a  hundred  and  sixty 
acres  upon  which  to  employ  their  barbarous  methods,  and  when  the  land 
already  taken  up  shall  have  risen  from  the  low  prices  at  which  it  now  stands 
to  fifty  dollars  or  more  per  acre,  a  new  dispensation  will  arrive.  Neither  the 
cattle,  nor  the  food  which  the  cattle  consume,  will  then  be  raised  by  any  such 
methods  as  now  prevail :  neither  will  they  be  exposed  to  the  elements  in 
winter.  True  enough,  the  opening  up  of  other  virgin  fields  in  Australia, 
South  America,  Africa,  and  elsewhere,  may  retard  this  rise  in  the  value  of 
the  land  in  the  western  part  of  our  continent,  and  thus  to  a  certain  extent  de- 
lay the  passing  of  the  land  exclusively  into  the  hands  of  larger  capitalists  and 
better  managers  ;  but  it  must  be  considered  that  not  all  climates  are  suitable 
for  energetic,  capable  farming  populations,  and  likewise  that  the  best  forage 
plants  are  restricted  to  temperate  latitudes." 


THE  NINETEENTH  CENTURY  IN  HISTORY.       465 

are  altogether  too  barbarous  to  be  much  longer  tolerated ; 
and,  as  the.result  of  such  progress,  the  return  of  the  prices 
of  meats  and  cereals  to  their  former  higher  rates,  which 
many  are  anticipating  on  account  of  the  increasing  number 
of  the  world's  consumers,  may  be  delayed  indefinitely. 
Possibly  in  the  not  very  remote  future,  the  world — as  its 
population  shows  no  signs  of  abatement  in  its  increase — 
may  be  confronted  with  a  full  occupation  of  all  farming- 
land  and  a  great  comparative  diminution  of  product 
through  an  exhaustion  of  its  elements  of  fertility ;  but,  be- 
fore that  time  arrives,  improvements  may  possibly  be  made 
in  agriculture  which  will  have  practically  the  same  effect  as 
an  increase  in  the  quantity  of  land ;  or  possibly  chemistry 
may  be  able  to  produce  food  by  the  direct  combination  of 
its  inorganic  elements. 

CONCLUSION. 

Finally,  a  comprehensive  review  of  the  economic  changes 
of  the  last  quarter  of  a  century,  and  a  careful  balancing  of 
what  seems  to  have  been  good  and  what  seems  to  have  been 
evil  in  respect  to  results,  would  seem  to  warrant  the  following 
conclusions :  That  the  immense  material  progress  that  these 
changes  have  entailed  has  been,  for  mankind  in  general, 
movement  upward  and  not  downward ;  for  the  better  and 
not  for  the  worse  ;  and  that  the  epoch  of  time  under  con- 
sideration will  hereafter  rank  in  history  as  one  that  has 
had  no  parallel,  but  which  corresponds  in  importance  with 
the  periods  that  successively  succeeded  the  Crusades,  the 
invention  of  gunpowder,  the  emancipation  of  thought 
through  the  Reformation,  and  the  invention  of  the  steam- 
engine  ;  when  the  whole  plane  of  civilization  and  humanity 
rose  to  a  higher  level,  each  great  movement  being  accom- 
panied by  social  disturbances  of  great  magnitude  and  seri- 
ous import,  but  which  experience  has  proved  were  but  tem- 
porary in  their  nature  and  infinitesimal  in  their  influence 


466  RECENT  ECONOMIC  CHANGES. 

for  evil  in  comparison  with  the  good  that  followed.  And 
what  the  watchman  standing  on  this  higher  eminence  can 
now  see  is,  that  the  time  has  come  when  the  population  of 
the  world  commands  the  means  of  a  comfortable  subsistence 
in  a  greater  degree  and  with  less  of  effort  than  ever  before ; 
and  what  he  may  reasonably  expect  to  see  at  no  very  remote 
period  is,  the  dawn  of  a  day  when  human  poverty  will  mean 
more  distinctly  than  ever  physical  disability,  mental  inca- 
pacity, or  unpardonable  viciousness  or  laziness. 

But,  in  order  that  this  dawning  may  be  hastened,  it  is  of 
the  first  importance  to  recognize  that  civilized  society  in  re- 
cent years,  and  under  the  new  economic  conditions  which 
those  years  have  evolved,  has  become  a  vastly  more  compli- 
cated machine  than  ever  before — so  complicated,  in  fact, 
that,  in  order  to  make  it  work  smoothly,  all  possible  obstruc- 
tions need  to  be  foreseen  and  removed  from  its  mechanism. 
Great  armaments;  millions  of  men  made  soldiers  and  re- 
moved from  the  work  of  production ;  laws  interfering  with 
free  commercial  exchanges  between  nations  —  these  and 
many  lesser  interferences  with  the  free  action  and  interaction 
of  industrial  social  forces  under  existing  conditions,  all  tend 
to  destructive  irregularities  or  stoppages  of  the  great  ma- 
chine ;  whereby  labor  is  rendered  unproductive  and  discon- 
tented, want  increased,  comfort  lessened,  social  inequalities 
multiplied,  the  comity  of  nations  discouraged,  and  the  idea 
of  the  brotherhood  of  man,  which  constitutes  the  foundation 
of  every  system  worthy  of  being  called  "  religious,"  denied 
and  repudiated. 


APPENDIX. 


Exhibit  of  the  Relative  Production  and  Prices  of  Iron  and 
Steel  in  the  United  States  and  Great  Britain,  and  of  the 
Extent  to  which  the  Duties  on  Imports  augment  the  Prices 
of  these  Metals  in  the  former  Country. 

THERE  is  probably  no  standard  by  which  the  relative  prosperity  of 
nations  can  be  so  accurately  gauged  as  by  their  relative  consumption 
of  iron  and  steel.  The  use  of  these  metals  corresponds  to  their  con- 
version into  rails,  engines,  machinery,  and  tools  of  every  kind  which 
lie  at  the  foundation  of  all  the  arts  of  production  and  distribution. 

The  iron  and  steel  industry  is  singular  in  another  respect.  There 
is  probably  no  other  art  about  which  the  statistics  are  so  ample,  so 
complete,  and  so  trustworthy.  The  United  States  Census  Heports  of 
1880,  by  Mr.  James  M.  Swank,  upon  Iron  and  Steel ;  by  Prof.  Ra- 
phael Pumpelly,  upon  Iron-Ore  and  Coal  Production ;  by  Mr.  Joseph 
D.  Weeks,  on  the  Coke  Industry,  leave  nothing  to  be  desired.  They 
cover  every  point  and  are  based  on  the  sworn  returns  of  establish- 
ments, in  which  the  work  is  conducted  in  such  a  systematic  way  as  to 
afford  an  absolute  and  complete  picture  of  the  condition  of  the  busi- 
ness ;  and  year  by  year  statistical  abstracts  and  other  publications  in 
the  United  States  and  Europe  keep  up  the  record  of  the  world's  ex- 
periences to  the  latest  dates.  No  more  important  addition  to  this 
department  of  economic  literature  has,  however,  been  made  in  recent 
years  than  the  publication  during  the  year  1888,  under  the  auspices  of 
the  American  Iron  and  Steel  Association,  of  a  complete  collection  of 
the  statistics  of  the  iron  and  steel  industries  of  the  United  States  for 
many  years  down  to  the  close  of  1887,  embracing  both  production  and 
prices,  with  the  concurrent  prices  of  British  iron  and  steel  from  1830 
to  1887  inclusive;*  inasmuch  as  it  affords  data  so  exact  as  to  permit 

*  "  A  Collection  of  Statistics  to  the  Close  of  1887,  relating  to  the  Iron  and 
Steel  Industries  of  the  United  States ;  to  which  i»  added  much  Valuable  Sta- 


468  RECENT  ECONOMIC  CHANGES. 

the  relative  prices  or  cost  of  iron  and  steel  to  the  consumers  of  these 
metals  in  the  United  States  and  Great  Britain,  for  the  period  men- 
tioned, to  be  clearly  exhibited. 

Taking  advantage  of  the  facilities  thus  afforded,  the  following  ex- 
hibit, believed  to  be  strictly  warranted  by  the  facts,  has  been  prepared 
and  is  here  submitted ;  with  the  premise  that  in  computing  its  state- 
ments of  numerical  results  small  fractions  have  been  omitted,  on  the 
assumption  that,  without  adding  anything  essential  to  completeness  in 
this  instance,  their  inclusion  tends  to  confuse  the  mind  and  conse- 
quently weaken  the  impression  which  it  is  desirable  should  be  made 
upon  the  reader. 

The  world's  average  annual  production  of  pig-iron,  from  1878  to 
1887,  was  in  round  numbers  20,800,000  net  tons  of  2,000  pounds 
each.*  In  1887  it  reached  24,600,000  net  tons.  The  average  prod- 
uct of  the  United  States,  from  1878  to  1887  inclusive,  was  4,758,000 
tons. 

The  average  annual  import  of  iron  by  the  United  States,  from  1878 
to  1887  inclusive,  in  the  form  of  pig,  bars,  rails,  and  plates  (omitting 
machinery  and  hardware),  was  1,100,000  net  tons.  Reasoning  from 
the  value  of  the  imports  of  machinery,  hardware,  and  other  manufact- 
ures of  iron  and  steel  during  the  same  period,  the  average  annual  im- 
port of  these  products  for  the  ten  years  in  question  was  probably  in 
excess  of  225,000  net  tons.  It  is  safe  to  say,  therefore,  that  the 
consumption  of  iron  and  steel  in  the  United  States,  in  one  form  or  an- 
other, each  year  for  the  ten  years,  1878  to  1887  inclusive,  was  about 
6,000,000  tons  of  2,000  pounds  each,  or  a  fraction  less  than  thirty  per 
cent  of  the  entire  product  of  the  world. 

The  consumption  of  the  United  States  for  the  year  1887  was  yet 
more  startling.  The  domestic  product  amounted  to  7,187,000  tons. 
The  import  of  rails,  bars,  plates,  and  the  like,  was  1,997,000  tons ;  and 
by  estimate  from  value,  the  import  of  machinery,  hardware,  tools,  etc., 
must  have  been  at  least  330,000  tons  additional,  giving  a  total  con- 
sumption for  the  year  of  9,500,000  net  tons,  or  a  fraction  less  than 
forty  per  cent  of  the  entire  product  of  the  world. 

The  pig-iron  production  of  the  United  States  for  1888  was  7,268,- 

tistical  Information  relating  to  the  Iron  and  Steel  Industries  of  Great  Britain, 
etc.,"  by  JAMES  M.  SWANK,  General  Manager  of  the  American  Iron  and  Steel 
Association,  Philadelphia,  1888,  8vo,  pp.  24. 

*  In  England  and  Russia  2,240  pounds  constitute  a  ton  of  pig-iron.  In  nil 
the  Continental  countries  of  Europe,  except  Russia,  the  metric  ton  of  2,204 
pounds  constitutes  the  standard.  In  the  United  States  2,240  pounds  consti- 
tute a  gross  ton,  and  2,000  pounds  a  net  ton. 


APPENDIX.  469 

507  net,  or  6,489,738  gross  tons.  For  the  twelve  months  ending  June 
30,  1889,  the  product  was  7,993,903  net,  or  7,137,413  gross  tons. 

The  average  annual  product  of  pig-iron  in  Great  Britain  from  1878 
to  1887  inclusive  was  7,500,000  gross  tons,  or  a  little  less  than  8,400,- 
000  net  tons.  The  product  of  1887  (7,559,518  tons)  corresponded  very 
closely  to  the  average  of  the  whole  period. 

It  therefore  follows  from  these  figures  that  the  consumption  of 
iron  and  steel  in  the  United  States  for  the  ten  years — 1877  to  1887 — 
was  equal  to  seventy-five  per  cent  of  the  average  production  of  Great 
Britain  during  that  period,  and  that  it  has  now  (1889)  reached  such 
dimensions  as  to  approximate  closely  to  the  present  entire  annual 
British  iron  and  steel  product.  Furthermore,  as  no  country  other 
than  Great  Britain  exports  iron  and  steel  in  quantities  proportioned  in 
any  important  degree  to  the  total  consumption  of  the  United  States, 
nearly  every  other  country,  with  the  possible  exceptions  of  Belgium, 
Sweden,  and  Norway,  importing  more  iron  and  steel  than  it  exports,  it 
is  obviously  impossible  for  the  United  States  to  procure  a  supply  ade- 
quate to  meet  its  consumption  of  these  necessary  metals  except  in 
great  measure  from  its  own  mines  and  furnaces.  It  is,  however,  ap- 
parent that,  until  within  a  very  short  time,  perhaps  only  since  the 
Southern  and  Western  mines  and  works  have  been  established,  the 
production  of  iron  in  the  United  States  has  been  conducted  at  a  very 
great  disadvantage.  In  Pennsylvania  and  in  many  other  parts  of  the 
country,  the  deposits  of  iron-ores  and  of  coal  are  separated  by  other 
intervening  geological  formations,  which  interpose  considerable  dis- 
tances and  heavy  grades  between  the  points  of  supply  of  these  mate- 
rials, while  the  iron-ores  of  the  Lake  Superior  region  are  very  far  re- 
moved from  the  sources  of  supply  of  the  fuel  by  which  they  must  be 
utilized  Hence  it  is  not  surprising  to  find  by  the  census  figures  of 
1880,  that  the  difference  between  the  value  of  the  ores  and  coal  at  the 
mines  and  of  coke  at  the  coke-ovens,  and  the  cost  of  these  materials  at 
the  iron-furnaces,  amounted  for  that  year  to  over  $21,000,000  on  a 
product  of  pig-iron  valued  at  $89,000,000,  a  difference  of  $5.60  per 
ton ;  most  of  which  must  have  been  expended  in  transporting  ores  or 
coal  from  widely  separated  mines  and  in  assembling  the  materials  at 
the  points  where  they  could  be  economically  converted.  In  confirma- 
tion of  this  statement,  the  testimony  of  Mr.  Cyrus  Elder,  of  the  Cam- 
bria Iron  Works  of  Pennsylvania,  given  in  a  tract  published  in  1888 
by  the  Industrial  League,  and  which  can  be  purchased  from  Mr.  James 
M.  Swank  at  262  South  Fourth  Street,  Philadelphia,  is  most  valuable. 
In  this  publication,  after  dealing  with  the  question  of  the  transporta- 
tion of  materials,  Mr.  Elder  states  that  "  the  books  of  one  of  the  prin- 
21 


V 

y 


470  RECENT  ECONOMIC  CHANGES. 

cipal  steel-rail  manufacturing  companies  for  the  year  1887  show  that 
the  cost  of  transportation  to  its  works,  of  the  materials  used  in  mak- 
ing each  ton  of  steel  rails,  amounted  in  that  year  to  $12.75,"  or  to  an 
aggregate  burden  or  tax  upon  the  product  of  the  year  of  $1,591,332.92. 
Mr.  Elder,  in  his  discussion  of  this  subject,  also  objects  to  the  duty  of 
$11  per  ton  which  the  bill  reported  by  the  Committee  of  Ways  and 
Means  to  the  United  States  House  of  Representatives  of  the  fiftieth 
Congress,  1888  (and  familiarly  known  as  the  "  Mills  Bill "),  proposed  to 
levy  on  the  import  of  steel  rails  into  the  United  States,  on  the  ground 
that  it  "  does  not  much  more  than  compensate  the  American  manufact- 
urer for  the  excess  in  cost  to  him  of  assembling  the  materials  above 
what  is  paid  by  his  foreign  rivals."  The  evidence,  therefore,  is  con- 
clusive that  until  a  recent  period  about  twenty-five  per  cent  of  the 
cost  of  iron,  and  more  than  twenty-five  per  cent  of  the  cost  of  steel  in 
the  United  States,  has  consisted  in  the  expense  of  assembling  the  ma- 
terials at  the  furnaces.  But  in  these  latter  days  the  furnaces  and 
mills  are  being  placed  where  they  belong,  to  wit,  at  the  various  points, 
especially  in  Alabama,  where  the  materials  may  be  said  to  assemble 
themselves — the  coal,  iron,  and  limestone  lying  near  the  surface  in  ad- 
jacent ridges,  not  separated  by  heavy  grades  or  excessive  distances.* 

,/   *  In  this  connection  the  following  remarks  of  Hon.  Abrarn  S.  Hewitt  at 
the  meeting  of  the  British  Iron  Trade  Association,  on  the  Ttli  of  May,  1S89 
(and  printed  in  the  official  record  of  the  proceedings  of  that  body),  will  be 
jread  with  interest. 

Mr.  Hewitt  said  :  "  In  Carolina  there  were  vast  bodies  of  magnetites,  and, 

'  if  not  very  near  to  the  coal  at  present,  railways  were  in  course  of  construction 
which  would  bring  them  within  sixty  miles  of  the  best  coal  in  the  world.  He 
had  made  a  calculation,  and  believed  that  coal  and  iron  could  be  brought  to- 
gether to  mate  pig-iron  for  Bessemer  steel  at  not  exceeding  40s.  ($9.74)  a  ton. 
He  knew  that  this  might  astonish  his  hearers,  particularly  in  view  of  the  fact 

<rthat  the  American  mining  industry  was  dependent  upon  a  duty ;  but  they 
were  slow  to  learn  in  the  United  States,  and  they  honestly  believed  that  they 
needed  this  protection,  and  it  would  go  on  until  they  had  fried  long  enough 
in  their  own  fat  to  learn  to  find  some  other  outlet  in  the  markets  of  the  world. 
There  was  a  vast  deposit  of  ore,  commencing  in  Tennessee  and  thickening 
until  in  Alabama,  where  a  great  physical  eruption  must  have  taken  place  at  one 
time,  a  mountain  was  covered  with  a  tifty-per-cent  ore,  which  was,  as  a  rule, 
in  admirable  condition  to  be  put  into  the  furnace.  It  was  not  low  enough  in 
phosphorus  for  the  acid  Bessemer,  but  could  be  used  for  the  basic  process. 
The  coal  and  the  ore  were  only  five  miles  apart,  and  about  five  shillings  ($1.25) 
would  deliver  at  the  furnace  the  materials  for  a  ton  of  iron.  Of  course,  this 
was  a  combination  which,  as  far  as  he  knew,  did  not  exist  anywhere  else  in 
the  world,  and  he  supposed  he  might  assume  that  the  only  drawback  at  all 


APPENDIX. 

It  now  becomes  interesting  to  compute  the  relative  price  or  cost  of 
iron  and  steel  to  the  consumers  of  these  metals  in  the  United  States 
as  compared  with  those  of  Great  Britain  and  other  countries ;  and  Mr. 
Swank's  little  pamphlet  affords  all  the  data  necessary  for  making  this 
comparison,  for  the  years  1878  to  1887  inclusive.  This  decade  includes 
one  year  of  prices,  in  the  United  States,  on  a  slightly  depreciated  paper 
basis.  Specie  payments  were  not  renewed  until  1879;  and,  during 
1878,  the  paper-money  price  of  iron  was  a  very  little  higher  than  the 
gold  price.  This  difference  may,  however,  be  legitimately  disregarded ; 
because,  if  we  had  the  enormous  figures  of  the  consumption  of  1888  to 
add  to  the  previous  years,  omitting  1878,  the  results  of  the  following 
computation  would  find  more  than  ample  confirmation.  Thus,  in  the 
period  under  consideration,  1878  to  1887  inclusive,  the  average  price  of 
anthracite  foundry-iron  in  Philadelphia  was  $21.87  per  ton.  During  the 
same  period  the  average  price  of  Scotch  pig-iron,  as  given  in  Mr.  Swank's 
pamphlet,  presumably  in  Glasgow,  was  $12.94,  reckoning  the  shilling 
at  twenty-four  cents.  During  the  last  portion  of  this  decade  trans- 
oceanic freights  were  very  low ;  considerable  quantities  of  iron  having 
been  even  carried  as  ballast,  without  charge.  But,  even  assuming  that 
the  freight  on  pig-iron  had  been  the  same  as  that  on  manufactures  of 
iron,  it  would  not  have  exceeded  $2  per  ton.  Adding  this  to  the  price 
in  Glasgow  gives  us  a  fraction  under  $15  per  ton,  as  the  price  of  Scotch 
pig  landed  in  the  United  States ;  and  deducting  this  from  the  price  of 
anthracite  foundry-iron,  as  above  stated,  we  find  a  disparity  of  $7  per 
ton  in  the  price  of  all  the  pig-iron  consumed  in  this  country  in  ten 
years,  as  compared  with  the  average  price  of  Scotch  pig  for  the  corre- 
sponding period  in  Great  Britain.* 

If  objection  be  taken  to  this  comparison,  it  may  be  more  fair  to 
take  a  higher  grade  of  iron.  For  example,  during  the  same  period  the 
average  price  of  the  best  rolled  bar-iron  in  Philadelphia  was  $50.30 
per  ton  of  2,240  pounds,  while  the  average  price  in  England  of  the  best 

would  be  in  the  higher  rate  of  wages ;  but  there  was  the  vast  body  of  negro 
labor  quite  available,  and  he  doubted  whether  the  per-diem  wage  was  so  much 
as  in  England." 

*  "  Scotch  pig"  is  taken  as  a  standard  in  these  comparisons,  because  it  is 
expedient  to  restrict  their  sphere  to  the  statistics  furnished  in  Mr.  Swank's 
valuable  report ;  and  the  average  prices  of  no  other  brands  of  British  pig-iron 
are  given  in  his  tables.  If,  however,  "  English  pig,"  which  represents  the 
bulk  of  British  production  and  consumption,  and  the  average  price  of  which 
is  less  than  Scotch  pig,  had  been  taken  as  the  British  standard,  the  disparity 
between  the  English  and  American  prices  of  iron  would  be  much  more  con- 
siderable than  that  above  indicated. 


472  RECENT  ECONOMIC  CHANGES. 

Staffordshire  marked  bars  was  $36.48,  a  difference  substantially  of  $14 
per  ton.  And  this  disparity  in  the  prices  of  iron  and  steel  in  the  two 
countries  becomes  greater  the  higher  we  go  in  the  grades  selected  for 
comparison.  But,  selecting  the  lowest  grades  as  the  standard,  and 
applying  the  difference  of  $7,  between  the  price  of  Pennsylvania 
anthracite  "  foundry  "  and  "  Scotch  pig  "  to  the  consumption  of  the 
United  States  of  60,000,000  tons  in  ten  years,  it  will  be  found  that 
the  consumers  of  iron  and  steel  in  the  United  States  paid,  in  the 
ten  years  from  1878  to  1887,  $420,000,000  in  excess  of  the  cost  of  a 
like  quantity  of  iron  to  the  consumers  of  Great  Britain  during  the 
same  period. 

In  respect  to  steel,  comparison  shows  the  disparity  of  prices  to  be 
even  much  greater.  Thus  the  production  of  steel  in  all  its  forms,  in 
the  United  States,  for  the  ten  years  under  consideration,  was  19,127,- 
000  net  tons.  The  import  of  steel  during  the  same  time  was  859,000 
tons.  Adding  this  last  amount  and  a  fair  allowance  for  other  kinds  of 
steel  imported,  it  becomes  apparent  that  the  consumption  of  steel  in 
the  United  States  in  the  ten  years  from  1878  to  1887  was  over  20,000,- 
000  tons. 

To  determine  now  the  difference  or  disparity  in  the  prices  of  steel 
in  the  two  countries,  the  lowest  form  will  be  again  taken  as  the  stand- 
ard for  comparison ;  and  for  so  doing  Mr.  Swank's  tables  afford  the 
following  data : 

The  average  price  of  steel  rails  in  the  United  States  from  1878  to 
1887  was  $44  per  ton.  In  Great  Britain,  during  the  same  period,  the 
average  was  $30  per  ton.  At  these  rates  the  adverse  difference  in  the 
cost  of  consumption  of  20,000,000  tons  of  steel  in  the  United  States 
would  have  been  $280,000,000.  But  as  a  difference,  as  respects  the  cost 
of  the  iron  used  in  the  making  of  steel  in  the  two  countries  of  $7  per 
ton,  has  been  already  allowed,  the  cost  of  the  consumption  of  steel  in 
the  United  States  may  be  properly  charged  with  only  one  half  this 
disparity,  or  $140,000,000. 

Taking,  therefore,  the  lowest  grades  of  iron  and  steel  as  a  standard 
in  this  computation  of  the  disparity  of  cost  or  price,  from  1878  to  1887, 
the  aggregate  excess  of  cost  of  iron  and  steel  in  ten  years,  to  the  con- 
sumers of  the  United  States,  above  that  paid  in  Great  Britain,  has 
been  $560,000,000,  or  at  an  average  of  $56,000,000  per  annum ;  and  on 
a  separate  computation,  made  in  the  same  way,  for  the  year  1887,  the 
disparity  in  price  for  the  United  States  rises  for  that  single  year  to 
$80,000,000. 

The  revenue  derived  by  the  Government  of  the  United  States  dur- 
ing the  fiscal  year  ending  June  30,  1887,  was,  on  ores  and  pig-iron, 


APPENDIX.  473 

$3,667,000,  and  on  manufactures  of  iron  and  steel  $17,046,000 ;  or  a 
total  of  $20,713,000. 

It  therefore  appears  that  in  the  process  of  collecting  an  amount 
of  revenue,  which  constituted  less  than  one  fifth  part  of  the  excess  or 
surplus  revenue  of  that  year,  the  country  was  subjected  to  an  addi- 
tional tax  of  $60,000,000,  which  was  paid  by  the  consumers  of  iron 
and  steel  in  some  way.  Doubtless  this  difference  was  largely  absorbed 
in  the  cost  of  assembling  the  materials,  and  by  charges  on  the  making 
of  iron  and  steel  in  those  iron-furnaces  and  rolling-mills  which  are 
either  out  of  place  or  out  of  date ;  and  it  can  not  fairly  be  claimed  to 
have  been  all  a  bounty  to  the  owners  of  the  works,  whatever  part  may 
have  gone  in  that  direction. 

Attention  is  next  asked  to  the  benefit  that  is  popularly  supposed  to 
accrue  from  making  iron  and  steel  in  the  United  States  in  preference 
to  importing  it. 

The  conditions  of  life  in  the  iron  and  coal  mines  have  been  so  often 
described  that  it  is  not  worth  while  to  here  repeat  them.  The  wages 
paid  are  low,  and  the  conditions  of  employment  are  as  bad  as  they  well 
can  be.  In  the  blast-furnaces  and  the  rolling-mills  the  conditions  are 
somewhat  better ;  but  the  work  is  arduous  in  the  extreme  and  most 
exhausting. 

In  the  census  year  1880,  in  which  it  was  estimated  that  the  sum 
paid  in  wages  corresponded  to  about  three  fourths  time  for  the  full 
force,  the  earnings  of  the  skilled  and  unskilled  workmen  in  all  the 
rolling-mills,  blast-furnaces,  coke-ovens,  and  iron  and  coal  mines  of 
the  United  States  averaged  $365  each  per  annum.  The  number  occu- 
pied in  these  industries  in  the  census  year  was  a  fraction  over  205,000 ; 
the  sum  of  their  earnings  was  $75,000,000.  The  production  of  the 
census  year  was  a  little  less  than  the  average  consumption  of  the  last 
ten  years,  and  about  four  sevenths  of  the  consumption  of  1887.  Since 
1880,  however,  very  great  improvements  have  been  made  in  the  pro- 
cesses of  conversion  of  ore  and  fuel  into  iron  and  steel,  by  the  applica- 
tion of  natural  gas  and  by  improvements  in  mechanism.  The  iron- 
mines  of  the  South  have  also  been  opened,  where  a  very  much  less 
proportionate  quantity  of  labor  suffices  for  the  production  of  a  given 
quantity  of  iron  than  in  Pennsylvania.  Wages  have  risen  in  daily 
rate,  but  the  cost  of  labor  in  a  ton  of  metal  has  been  reduced ;  and  the 
sum  of  the  wages  has  also  proportionately  diminished  in  ratio  to  the 
value  of  the  product.  It  may  be  safe  to  compute  that  there  are  now 
occupied  in  this  work  of  making  iron  and  steel  for  65,000,000  people 
about  300,000  men  and  boys,  averaging  perhaps  $400  a  year  each  in 
wages,  earning  altogether  $120,000,000.  The  people  of  the  United 


474  RECENT  ECONOMIC  CHANGES. 

States  therefore  paid,  in  the  year  1887,  $21,000,000  toward  the  surplus 
revenue,  and  $60,000,000  excess  in  price,  which  was  distributed  among 
the  owners  of  the  mineral  lands,  the  owners  of  the  furnaces,  and  the 
operators  of  the  Bessemer  process,  and  also  among  the  railways,  for 
the  cost  of  assembling  the  materials. 

In  1880  there  were  1,005  iron  and  steel  works,  rolling-mills,  and 
blast-furnaces  in  the  United  States,  whose  aggregate  capital,  accord- 
ing to  Mr.  Swank,  was  $231,000,000.  According  to  Prof.  Pumpelly, 
the  capital  in  the  iron-mines  of  the  country  for  that  same  year  was 
$62,000,000 ;  and  from  the  joint  reports  of  these  two  census  experts  it 
would  appear  that  the  aggregate  capital  invested  in  all  the  coal-mines 
of  the  country,  at  the  same  date,  was  $248,000,000,  of  which  nearly 
$200,000,000  stood  for  the  value  of  the  mineral  lands  or  royalties. 
The  proportion  of  coal  and  the  cost  of  coking,  chargeable  to  the  iron 
industry,  may  possibly  cover  the  odd  $48,000,000.  The  entire  capital 
invested  in  the  iron  and  steel  industry  of  the  United  States  in  1880 
was,  therefore,  about  $341,000,000;*  and  the  data  above  submitted 
warrant  the  conclusion  that  the  price  paid  by  the  consumers  of  iron 
and  steel  in  the  United  States,  in  order  to  sustain  these  industries  for 
ten  years,  and  to  enable  the  owners  thereof  to  enjoy  its  profits — pay- 
ing wages  to  their  employes  somewhat  less  on  an  average  than  were 
paid  at  the  same  time  to  other  and  outside  labor — was  about  sixty-five 
per  cent  more  than  the  entire  capital  invested  in  it.  And,  as  it  has  been 
already  shown  that  it  would  be  impossible  for  any  other  country  to 
supply  the  annual  requirements  of  the  United  States  of  iron  and  steel 
for  consumption,  it  further  follows  that  the  payment  of  $50,000,000 
to  $80,000,000  per  annum  by  this  country  to  sustain  a  branch  of  in- 
dustry which  can  not  be  displaced  or  destroyed  by  any  possible  foreign 
competition,  is  clearly  unnecessary. 

It  will  be  also  pertinent  at  this  point  to  consider  the  probable  effect 
of  the  removal  of  all  duties  (taxes)  now  imposed  upon  the  importation 
into  the  United  States  of  ores  of  iron,  and  upon  coal,  coke,  crude  iron 
and  steel,  and  upon  tools,  machinery,  and  implements  of  every  kind 
made  therefrom ;  which  duties  now  yield  a  revenue — not  required — of 
from  $20,000,000  to  $22,000,000  per  annum. 

The  paramount  advantage  of  Great  Britain  over  even  Belgium  and 
Germany  long  since  passed  away.  Her  mines  of  the  finer  qualities  of 
iron-ore,  while  they  can  not  be  said  to  be  absolutely  exhausted,  are  yet 

*  Blast-furnaces  and  rolling-mills,  $231,000,000;  iron-mines,  $62,000,000; 
coal-mines  appurtenant  to  iron  and  steel  and  coke  works,  $48,000,000 ;  total, 
$341,000,000. 


APPENDIX.  475 

worked  under  such  bad  conditions  that  England  is  forced  to  import 
iron-ores  from  Spain,  from  Elba,  and  from  Africa.*  Her  coking  coals 
are  also  produced  under  conditions  of  great  disadvantage,  which  have 
been  thus  described  in  a  recent  (1886)  report  by  Mr.  Joseph  D.  Weeks 
to  the  United  States  Geological  Survey.  Referring  to  the  most  im- 
portant British  coke  district — the  "  Durham  " — from  which  nearly  one 
half  of  the  coke-supply  of  Great  Britain  is  derived,  he  says :  "  The 
typical  coke  of  Great  Britain,  as  the  McConnellsville  is  of  the  United 
States,  is  the  Durham  coke ;  it  is  high  in  carbon,  low  in  ash,  etc. ;  the 
veins  are  low,  the  thickest  measuring  but  six  feet ;  the  miner  is  neces- 
sarily compelled  to  lie  in  a  constrained  and  cramped  condition  upon 
his  back  while  working,  never  standing  upright  while  in  the  face ;  the 
pits  are  deep  and  the  mines  fiery,  with  all  the  danger  to  life  and 
health  arising  from  these  conditions.  The  best  coal  is  obtained  from 
the  lower  seams."  The  Durham  cokes  are  furnished  at  a  lower  price 
than  any  other  in  Great  Britain  or  in  Europe.  The  average  earnings 
of  those  who  work  in  them  are  from  seventy  cents  to  $  1.10  per  day.  The 
cost  of  coke  in  Durham  is  not  given.  The  price  of  coke  for  Bessemer 
pig  in  Cardiff,  Newport,  and  Swansea  is  stated  to  be  $3.51  to  $3.57. 
In  South  Wales  the  cost  of  a  ton  of  coke  is  given  at  $1.70,  and  in  Bel- 
gium at  $2.57.  At  McConnellsville,  Pa.,  the  rates  of  wages  are  con- 
siderably higher,  but  have  been  somewhat  depressed  of  late  by  reason 
of  the  use  of  natural  gas  at  Pittsburg.  For  several  years,  according 
to  Prof.  Pumpelly's  investigations,  the  value  of  coke  at  the  oven 
throughout  the  United  States  was  $1.22  per  ton;  a  striking  example 
of  production  at  low  cost — i.  e.,  of  coke — with  exceptional  high  wages, 
owing  to  the  better  conditions  under  which  the  work  is  performed. 

The  data  for  the  cost  of  iron-ore  and  steel  in  Great  Britain  and  in  the 
United  States,  and  for  the  comparison  of  the  rates  of  wages,  are  not  at 

*  The  importation  of  iron-ores  into  the  chief  iron-producing  countries  of 
Europe  dates  from  about  the  year  1866,  when  the  Bessemer  process  had  be- 
come fairly  established.  In  that  year  Great  Britain  imported  little  or  no 
ores,  the  only  European  countries  receiving  supplies  of  foreign  ores  being 
France,  Germany,  Belgium,  and  Austria.  The  aggregate  imports  of  those 
four  countries  amounted  at  that  time  to  nearly  900,000  tons,  or  about  one  sev- 
enth of  the  total  now  imported  into  the  chief  iron-making  countries  from  out- 
side sources.  In  1868  the  iron-ore  imports  of  Great  Britain  were  returned  at 
114,435  tons.  In  1877  they  exceeded  1,000,000  tons.  In  1880  they  suddenly 
rose  to  2,634,000  tons ;  and  for  1887  they  amounted  to  8,762,000  tons.  That 
large  areas  of  consumption  in  the  United  States  also  found  it  profitable  to  use 
foreign  ores  of  iron  is  shown  by  importation  into  the  country,  in  the  single 
year  1888,  of  1,770,947  tons,  notwithstanding  a  duty  on  the  same  of  thirty- 
eight  per  cent. 


476  RECENT  ECONOMIC  CHANGES. 

present  available.  It  is  alleged,  however,  that  the  abundance  of  our  sup- 
ply  of  ores  and  coal,  lying  near  the  surface  and  in  close  proximity,  will 
enable  the  American  manufacturer  to  pay  about  double  wages,  in  com- 
parison with  Great  Britain,  and  yet  to  bring  out  the  iron  at  the  furnace 
at  the  same  cost,  so  far  as  the  element  of  labor  in  it  is  concerned. 
Under  the  instructions  lately  given  by  Congress  to  the  Bureau  of  the 
Statistics  of  Labor,  and  by  means  of  the  investigations  which  are  now 
in  progress,  it  may  be  possible  at  no  distant  day  to  be  able  to  compare 
the  cost  of  production  of  iron  and  steel  and  other  crude  or  partly 
manufactured  materials  in  the  United  States  in  terms  of  days'  labor, 
or  by  the  quality  and  intensity  of  the  labor,  as  well  as  in  terms  of 
price,  or  by  the  rate  of  wages ;  the  latter  being  an  entirely  fallacious 
standard,  seldom  of  any  value  in  making  the  comparison  of  the  rela- 
tive power  of  one  country,  as  compared  with  another,  to  supply  goods 
or  wares  of  any  kind.  For,  as  a  rule,  the  rates  of  wages  in  all  industries 
to  which  modern  machinery,  tools,  and  inventions  have  been  applied, 
are  in  inverse  proportion  to  the  cost  of  the  product,  so  far  as  it  is 
made  up  of  the  wages  of  labor — the  lowest  cost  being  the  correlative 
or  complement  of  the  highest  rates  of  wages,  where  the  commerce  be- 
tween several  countries,  or  between  the  sections  of  one  country  with 
another  is  free  from  artificial  obstruction.  Doubtless  a  sudden  remis- 
sion of  the  existing  duties  now  levied  by  the  United  States  on  the 
importation  of  iron  and  steel  would  result  in  the  suspension  of  some 
furnaces — perhaps  a  considerable  number — which  are  out  of  date  as 
respects  location,  construction,  and  management.  Such  establish- 
ments are  now  kept  alive  only  by  the  disparity  in  the  price  of  their 
products  in  the  markets  of  the  United  States  and  of  Great  Britain. 
Concurrently,  also,  there  might  be  a  sudden  and  excessive  demand  upon 
the  iron-mines  and  furnaces  of  Europe,  especially  of  Great  Britain,  for 
their  products.  But  this  last  could  not  be  met  without  altering  all 
the  existing  conditions  of  the  iron  industries  of  those  countries. 
Miners  and  metal-workers  are  not  trained  in  a  day ;  and  those  who 
are  in  such  work  would  immediately  feel  the  effect  of  the  additional 
demand  and  would  call  for  higher  wages ;  while  the  disadvantages  of 
production  in  Great  Britain  would  be  rendered  even  greater,  through 
the  necessity  of  ordering  larger  and  larger  supplies  of  ore  from  Spain, 
Elba,  and  Africa.  The  supply  in  Spain  being  now  limited,  it  could 
hardly  fail  to  happen  that  a  heavy  advance  in  the  price  of  iron  would 
occur  throughout  Europe.  The  sudden  appearance  of  a  free  customer, 
whose  consumption  is  already  forty  per  cent  of  the  total  production  of 
the  world,  for  any  considerable  part  of  the  iron  and  steel  supply  from 
other  countries,  would  have  an  effect  on  the  conditions  of  the  work- 


APPENDIX.  477 

men  in  Europe  very  greatly  disproportionate  to  the  quantity  called 
for.  Such  an  advance  in  the  price  of  these  products  on  the  other  side 
of  the  ocean  would  immediately  protect  all  the  well-placed  iron-fur- 
naces, mines,  and  metal-works  of  the  United  States.  Their  control  of 
their  own  markets  would  then  be  established ;  stability  would  be  given 
to  the  conditions  of  business,  and  the  American  consumers  of  iron, 
who  outnumber  the  makers  of  iron  by  twenty  to  one,  would  be  relieved 
from  their  present  disadvantages  in  competition  with  other  countries. 

It  is  well  known  and  may  be  considered  a  well-established  fact 
that,  in  almost  all  the  arts  of  using  iron  and  steel,  the  people  of  the 
United  States  excel  those  of  Great  Britain.  Their  heavy  exports  of  lo- 
comotives, of  cutlery,  axes,  sewing-machines,  pumps,  and  the  like,  bear 
witness  to  this  fact.  The  only  reason  why  they  have  been  unable  thus 
far  to  build  ocean  steamships  has  been  the  disparity  between  Europe 
and  America  in  the  price  of  materials.  This  would  be  removed  for  all 
time  by  the  heavy  advance  in  the  price  of  such  materials  in  Great 
Britain  and  on  the  Continent,  which  would  certainly  ensue  from  the 
increased  demand  contingent  on  the  abrogation  of  import  duties  under 
consideration ;  and  then  would  follow  such  a  participation  by  the 
United  States  in  the  commerce  and  carrying-trade  of  the  world  as  her 
natural  advantages  entitle  her  to  claim  and  expect.  Holding,  as  her 
people  now  do,  the  paramount  position  in  the  production  of  iron  and 
steel  at  low  cost,  but  at  higher  rates  of  wages  than  are  elsewhere 
paid  for  similar  service,  the  time  would  soon  come  when  all  questions 
of  competition  in  the  production  and  supply  of  iron  and  steel  would 
cease.  The  people  of  the  United  States,  furthermore,  are  not  subjected 
to  the  burden  of  excessive  taxes  in  ratio  to  their  product,  their  gross 
taxes  being  even  much  less  per  capita  than  those  of  any  other  country. 
They  are  free  from  the  burden  of  standing  armies,  the  cost  of  which  is 
represented  only  in  small  measure  by  the  amount  paid  to  support 
them,  but  is  felt  in  greatest  measure  by  the  withdrawal  of  men  at  the 
most  productive  period  of  life  to  waste  their  time  in  camps  and  bar- 
racks. They  would,  accordingly,  assume  that  advantage  of  position 
to  which  they  are  entitled  in  the  civilized  world  and  for  supplying  the 
non-machine-using  nations  with  every  kind  of  manufactured  products 
which  they  may  require. 

It  may  be  held  by  those  who  would  oppose  the  remission  of  all  du- 
ties upon  iron,  steel,  machinery,  and  the  like,  that,  unless  this  artificial 
stimulus  of  a  high  tariff  had  been  given  to  those  branches  of  indus- 
try in  the  United  States,  they  would  not  have  been  developed  to  any- 
thing like  the  extent  which  has  occurred.  This  is  a  pure  hypothesis. 
There  is  no  foundation,  in  fact,  for  any  such  theory.  The  iron  and 


478  RECENT  ECONOMIC  CHANGES. 

steel  industry  in  the  United  States  is  older  than  the  Constitution,  and 
its  growth  has  been  coincident  with  the  growth  of  the  country. 
Doubtless  the  variations  in  the  tariff,  as  well  as  in  the  demand  for 
railway  purposes,  have  subjected  this  branch  of  industry  to  greater 
fluctuations  than  almost  any  other.  Whether  or  not  the  product  of 
iron  and  steel  would  have  been  as  great  as  it  is  now  without  the  inter- 
ference of  the  Government  is  to-day  a  matter  of  no  consequence.  It 
is  a  dead  issue.  The  question  now  is,  What  is  the  cost  to  the  people  of 
the  United  States  of  this  disparity  in  the  price  of  iron  and  steel  which  is 
due  to  the  maintenance  of  a  tariff — a  tariff  not  for  the  purpose  of  build- 
ing up  or  starting  an  infant  industry,  but  for  the  mere  purpose  of  main- 
taining the  present  conditions,  whatever  they  may  be  f  When  viewed 
in  this  light,  the  cost  of  the  system  may  prove  to  be  much  more  than 
it  is  worth  to  the  people  subjected  to  its  burden,  for  it  is  a  tax  upon 
productive  capital  and  productive  power  laid  at  the  very  foundation 
of  all  industry.  The  disparity  in  the  price  of  rails  costs  every  mile  of 
railway  in  the  United  States  a  certain  amount  of  money  over  and  above 
the  cost  of  laying  rails,  for  example,  in  India,  over  which  wheat  is  to 
be  transported  that  comes  into  direct  competition  with  American 
wheat  in  foreign  markets. 

The  people  of  the  United  States  being  deprived  of  the  power  to  build 
steamships  for  ocean  service,  and  the  disparity  in  the  price  of  mate- 
rials increasing  the  cost  of  their  railways  by  ten  per  cent  and  of  their 
mills  and  factories  by  twenty,  and  even  in  some  cases  by  fifty  per  cent, 
as  compared  with  the  cost  of  the  mills  and  works  of  their  direct  com- 
petitors in  other  countries,  the  latter  are  thus  enabled  to  supply  the 
non-machine-using  nations  of  the  world  with  the  greater  part  of  their 
necessary  goods  and  wares,  and  are  sending  to  the  United  States  a 
constantly  increasing  proportion  of  goods  and  wares  for  its  consump- 
tion, in  spite  of  the  high  taxes  levied  on  their  importation. 

The  American  people  are  thus  subjected  to  a  very  heavy  and  con- 
tinuous loss.  Their  power  of  controlling  their  home  markets  is  im- 
paired ;  they  lose  the  advantage  of  their  position  and  of  their  oppor- 
tunity to  supply  the  vast  non-machine-using  countries  of  the  world, 
containing  over  a  thousand  million  population,  with  goods  and  wares 
made  at  high  wages  and  low  cost,  for  the  reason  that,  in  consequence 
of  a  disparity  in  the  price  of  the  material  which  lies  at  the  foundation 
of  all  arts,  they  have  by  their  own  act  given  supremacy  to  Great 
Britain,  in  the  lower  cost  of  her  investments,  for  meeting  this  de- 
mand. 


INDEX. 


A; 


Africa,  South,  trade  depression  in,  2. 

Agricultural  implements,  displace- 
ment of  labor  in  manufacturing,  52 ; 
labor  in  England  six  hundred  years 
ago,  402. 

Agriculture,  British,  recent  losses  of, 
87 ;  depression  of,  in  Europe,  177 ; 
future  of,  464;  disinclination  for 
pursuit  of,  353 ;  of  Europe,  four 
causes  for  depression  of,  89 ;  pop- 
ulation engaged  in  the  United  States, 
178 ;  Russian,  restrictions  on,  280. 

America,  surplus  wheat  product  of, 
178. 

Anaesthetics,  reduction  of  mortality 
through  use  of,  847. 

Anglo-French  treaty  of  1860,  results 
of,  263. 

Animal  products,  curious  price 
changes  of,  195. 

Animals,  essential  difference frommen, 
400 ;  limitation  of  wants  of,  400. 
pothecary,  modern,  changes  in  busi- 
ness of,  54. 

Argentine  States,  bounties  on  export 
of  meat,  809 ;  meat  product  of,  160 ; 
progress  of,  455. 

Armies  of  Europe,  coBt  of,  822 ;  num- 
bers of  men  in,  322. 

Art,  impolicy  of  taxing,  890 ;  stimulus 
to  industrial  development,  390. 

Artiste,  increased  opportunities  for 
employment  of,  888. 

A  riH,  disappearance  of  certain,  55. 


Asia  Minor,  famines  in,  335. 

Associations,  co-operative,  451,  452. 

Atkinson,  Edward,  investigations  of, 
209,  258,  342,  409,  412 ;  on  the  cost 
of  food,  258,  341 ;  on  the  cultivated 
land  of  the  United  States,  176 ;  on 
the  economic  value  of  a  glass  of 
beer,  405. 

Australia,  commercial  distress  in  1885, 
2;  recent  progress  of,  454;  wages 
of  labor  in,  362. 

Bacteriology,  discoveries  in,  848. 
Bananas,  consumption  of,  339. 
Banking,  concentration  of,  99. 
Bank-notes,  reduced  cost  of  making, 

53. 

Bank  of  France,  gold  and  silver  re- 
serves in,  211 ;  new  notes  of,  53. 
Barter,  three  forms  of,  219. 
Bastiat's  law  of  the  distribution  of 

capita],  370. 
Bear,  W.  E.,  on  the  meat-supply  of 

the  United  Kingdom,  158. 
Beaulieu,  Leroy,  on  the  cost  of  living 

in  France,  404. 

Beef-slaughtering,  economics  in,  97. 
Beer,  economic  value  of  a  glass  of, 

405. 
Beet-root  sugar,  bounties,  European, 

experience  of,  295 ;  production  of, 

127, 129, 180. 
Bell,  Sir  Lowthian,  on  the  prices  of 

iron,  139. 


480 


RECENT  ECONOMIC  CHANGES. 


Bessemer  steel,  importance  of  the  in- 
vention, 43. 

Bessemer  steel  rails,  average  prices  of, 
1883-'86,  43 ;  comparative  prices  in 
the  United  States  and  Great  Britain, 
320,  472. 

Bi-metalism,  225. 

Bi-metallic  controversy,  relation  of,  to 
civilization,  256. 

Bleaching-powders,  recent  prices  of, 
158. 

Bombay,  recent  economic  experiences 
of,  434. 

Boot  and  shoe  industry,  displacement 
of  labor  in,  by  machinery,  52. 

Boot  and  shoe  manufacture,  division 
of  labor  in,  94. 

Bottles,  displacement  of  labor  in  mak- 
ing, 52. 

Bounties,  on  shipping,  309;  sugar- 
production,  126, 128,  295,  299 ;  ulti- 
mate effect  on  production,  306. 

Brazil,  commercial  policy  of,  272. 

Bread,  cost  of  manufacture  and  distri- 
bution, 58 ;  question  of  future  scar- 
city, 177 ;  reduction  in  the  cost  of,  in 
Great  Britain,  85. 

Bridge,  Brooklyn,  economic  experi- 
ences of,  385. 

Blight's  disease,  increase  of,  350. 

British  commercial  sentiments,  change 
in,  266. 

British  exports  and  imports  in  1887, 
comparison  of  volume  and  values, 
84. 

British  industries,  growth  in  fifty 
years,  62. 

British  people,  purchasing  power  of, 
356. 

British  shipping,  supremacy  of,  313. 

Brooklyn  (N.  Y.)  suspension-bridge, 
385,  386. 

Bullion,  increased  facilities  for  mov- 
ing, 213. 

Business,  modern  conditions  of,  107  ; 
new  conditions  entailing  disease, 
860.  -  S  v-  CC*-«4|  ,  3  6 '/ 


Butter,  artificial,  449. 

Buttons,  changes  in  manufacture  and 
style,  389 ;  cuff,  conditions  of  manu- 
facture, 92. 

California,  minimum  cost  of  growing 
wheat  in,  98. 

Canal,  Liverpool  and  Manchester,  112. 

Canals,  in  France,  recent  experience 
of,  113 ;  in  the  United  States,  com- 
parative rates  on,  113 ;  return  to  the 
use  of,  112;  Suez,  economic  influ- 
ence of,  29. 

Capital  and  labor,  present  relations 
of,  91. 

Capital,  available,  in  the  world,  217 ; 
impairment  in  value  of,  418 ;  in- 
vested in  sugar-refining,  92. 

Capitalistic  system  of  production,  ad- 
vantages of,  399 ;  law  of  destruction 
of,  369. 

Carpenters  of  Paris  demand  protec- 
tion, 281.  * 

Carrying-trade,  on  land,  revolution  of, 
40 ;  on  sea,  37. 

Cattle,  new  methods  of  fattening,  463 ; 
use  of  sugar  for  feeding,  301. 

Century,  nineteenth,  place  in  history, 
465. 

Cereals,  British,  recent  decline  in  the 
prices  of,  90 ;  regulation  of  the 
prices  of,  45 ;  world's  surplus, 
where  stored,  45. 

Chadwick,  David,  on  the  laboring- 
classes  of  Great  Britain,  356. 

Cheese,  improvements  in  manufacture 
of,  162 ;  recent  price  experiences  of, 
162. 

Chemicals,  recent  decline  in  prices  of, 
158. 

Chemnitz,  condition  of  labor  in,  365. 

Chewing-gum,  price  and  demand  for, 
199. 

Child  labor,  increase  of,  95. 

Children,  reduction  of  death-rate  in 
British  union  poor-schools,  348. 

Chili,  deposits  of  nitrate  of  soda,  156. 


INDEX. 


481 


China,  Cochin,  commerce  and  trade 
of,  276  ;  inferiority  in  tea-produc- 
tion, 153  ;  recent  famines  in,  71, 
385. 

Chinese  expulsion  from  the  United 
States,  286 ;  immigration,  appre- 
hension of,  374. 

Cigars,  increase  in  consumption  of,  337. 

Cinchona- trees,  cultivation  of,  in  the 
East  Indies,  154. 

Cincinnati,  market  prices  for  1884-'87, 
201. 

Circulation,  monetary,  of  the  United 
States,  221-223. 

Cities,  aggregation  of  population  in, 
352;  tendency  of  population  to,  432. 

Civilization  and  barbarism,  changes 
in  the  conditions  that  define,  64. 

Civilization,  high,  antagonistic  to  the 
use  of  silver,  255 ;  modern,  tendency 
of,  324 ;  present,  made  possible  by 
machinery,  336. 

Civilizations,  money  of,  varying,  253. 

Clearing-houses,  recent  statistics  of, 
214. 

Cloth,  cotton,  reduction  in  the  prices 
of,  258. 

Clothes,  cheap,  purchasers  of,  431. 

Clothing,  cheap,  benefit  of,  430 ;  pro- 
duction of  materials  for,  258 ;  ready- 
made,  increase  in  sizes  demanded 
in  the  United  States,  348. 

Coal,  displacement  of  use  by  natu- 
ral gas,  56 ;  economy  in  consump- 
tion of,  150;  power  evolved  from 
consumption  of,  under  modern  con- 
ditions, 38;  production  in  Russia, 
280 ;  product  of  the  United  States, 
149 ;  effect  of  machinery  on,  50 ;  re- 
cent production  and  price  experi- 
ences of,  148;  reduction  in  con- 
sumption of,  by  ocean-steamers,  88 ; 
world's  product  of,  149. 

Coal-tar  colors,  economic  influence  of, 
65. 

Coffee,  recent  production  and  price  ex- 
periences of,  152 ;  variations  in  price 


and  consumption  of,  380 ;  world's 
annual  production  of,  152. 

Coinage  of  the  world,  tri-metallic,  254. 

Coinage,  silver,  of  the  United  States, 
228. 

Coin,  small  use  of,  in  bank  transac- 
tions, 214. 

Coins,  use  of  small,  when  necessary, 
252. 

Colonial  policy  of  France,  276. 

Comity  of  nations,  decline  in,  285. 

Commerce,  foreign,  of  European  coun- 
tries, 290 ;  how  the  telegraph  has 
revolutionized,  32  ;  ocean,  of  the 
world,  how  carried,  314. 

Commercial  intercourse  of  nations, 
how  restricted,  316. 

Commodities,  divergence  in  price- 
movements,  200  ;  modern  condi- 
tions, for  cheap  production,  74; 
per  capita  consumption  of,  in  Great 
Britain,  356  ;  prices  of,  and  the  de- 
cline in  the  value  of  silver,  250 ;  sup- 
ply of, governed  by  differentlaws,  31. 

Compensations  for  economic  disturb- 
ances, 430. 

Competition,  social  influences  of,  452. 

Connecticut,  cost  of  food  in  alms- 
houses  of,  341;  decline  in  land- 
values  in,  425 ;  purchasing  power 
of  wages  in,  405,  409. 

Consumption,  increase  in  consequence 
of  reduction  of  price,  383 ;  of  com- 
modities, stimulants  to,  380 ;  rela- 
tions to  production,  330 ;  relation  to 
price,  379. 

Co-operation,  analysis  of,  452. 

Co-operation  and  the  labor  problem, 
108, 104. 

Copper,  modern  cost  of  producing, 
185;  production  and  price-experi- 
ences of,  134;  "syndicate,"  history 
of,  137. 

Copper  money,  conditions  for  use  of, 
253. 

Coral,  decline  in  prices  of,  195. 

Corea,  monetary  experiences  of,  258. 


482 


RECENT  ECONOMIC  CHANGES. 


Corn,  export  of  American,  to  Italy, 
91 ;  product  of  the  United  States, 
334 ;  shelling  of,  334. 

Corn  laws,  effect  of  repeal  of,  260. 

Cotton,  how  bought,  110 ;  manufact- 
ure of  the  United  States,  relation 
of  wages  and  service,  373 ;  purchas- 
ing power  of,  at  different  periods, 
220 ;  recent  price-experiences  of, 
179 ;  reserve  stocks  of,  182;  world's 
supply  of,  181. 

Cotton  cloth,  relations  of  price  and 
consumption,  382. 

Cotton  fabrics,  recent  increased  con- 
sumption of,  180. 

Cotton-growing,  conditions  for  profit- 
able, 100. 

Cotton-mills  of  the  United  States,  di- 
vision of  employe's  in,  95.  • 

Cotton  piece-goods,  exports  of,  to 
India,  240 ;  prices  and  product, 
1865-'85,  220. 

Cotton-seed  oil,  use  of,  159. 

Countries,  average  earnings  of  people 
of  different,  362 ;  non-machinery- 
using,  exempt  from  economic  dis- 
turbances, 68 ;  of  greatest  progress, 
454. 

Cracker-bakeries,  consumption  of  tin- 
plate  by,  108. 

Credit  and  capital,  effect  on  trade  of 
the  world,  217. 

Crime,  decline  in  Great  Britain,  345, 
359 ;  increase  in  the  United  States, 
345 ;  recent  statistics  of,  345 ;  rela- 
tions to  education,  359. 

Crises,  financial,  of  the  last  century, 
81 ;  periodicity  of,  81. 

Crop  failures  in  1879-'81,  6. 

Cuba,  improved  production  of  sugar 
in,  102. 

Culture,  influence  of,  on  consump- 
tion, 77. 

Cycles  of  panic  and  speculation,  80. 

Dakota,  wheat  product  of,  57,  170. 
Death-rate,  decline  in,  3467 


Debtors,  relative  burdens  of,  220. 
Demonetization  of  silver,    meaning 

of  term,  230. 
Diamonds,  market  for,  in  the  United 

States,  197 ;  recent  production  and 

prices,    experiences    of,  196,  197 ; 

South  African  supply  of,  196;  value 

of,  exported  from  South  Africa,  197. 
Discontent,  societary,  causes  of,  407. 
Diseases,  children's,  extinction    of, 

348;  of  civilization,  349,  350. 
Distress  of  agricultural  laborers  in 

Europe,  376-378. 
Distribution,  modern  economies  in, 

110 ;    of  products,  disturbance  in 

old  methods  of,  100. 
Disturbances,   economic,  since  1873, 

explanation  of,   61 ;  industrial,  in 

connection  with  the  invention  of 

stocking-making  machinery,  367. 
Dollar,  silver,  of  the  United  States, 

experience  of,  227. 

Earnings  of  people  of  different  na- 
tionalities, 362. 

Earth  and  rock,  reduction  in  the  cost 
of  excavating  since  1859-' 60,  50. 

East,  possible  future  trade  of  the,  461. 

Economic,  disturbances  since  1873, 1 ; 
outlook,  the,  324,  427  ;  peculiarities 
in  the  United  States,  387. 

"  Economist,"  London,  tables  of  index 
prices,  122. 

Economies,  influence  of  small,  85. 

Educational  system  of  Great  Britain, 
359. 

Egypt,  reclamation  of,  459. 

Eight-hour  law,  439. 

Electricity,  industrial  use  of,  66 ;  in- 
fluence of  prospective  use  on  labor 
conditions,  400 ;  relations  to  trade, 
65. 

Employment  of  labor,  changing  con- 
ditions of,  375. 

Engines,  compound  steam,  economi- 
cal results  of,  38. 

England,    banking    deposits   of,    in 


INDEX. 


483 


1874-1884,  212;  depression  in,  18; 
pauperism  in,  344;  present  popu- 
lation not  formerly  possible,  330. 

Europe,  development  of  trade  under 
conditions  of  free  exchange,  263 ; 
liberal  commercial  movement  in, 
from  1854-'70,  261,  262 ;  meat,  sup- 
ply of,  161 ;  military  system  of,  323 ; 
present  wheat  product  of,  179 ;  re- 
actionary commercial  policy  of, 
287,  292 ;  recent  experience  of  their 
mercantile  marines,  311. 

Evolution,  illustration  of  societary  re- 
form through,  362 ;  material,  pros- 
pect of  continuance,  67 ;  of  industry 
and  society,  327. 

Exchange,  evils  from  fluctuations  of, 
238 ;  fluctuations  in,  an  invariable 
accompaniment  of  trade,  238. 

Export  bounties  on  sugars,  126-129. 

Failures  in  business,  ratio  of,  351. 

Famines,  prevention  of,  45. 

Farming  capital,  losses  of,  in  Great 
Britain,  87. 

Farm-laborers,  English,  wages  of,  88. 

Fashion,  influence  of,  on  the  price  of 
wool,  188. 

Fish,  cultivation  of,  for  food,  339 ;  fe- 
cundity of,  339 ;  low  prices  of,  in 
1884,  2 ;  recent  decline  in  prices  of, 
163. 

Flint,  Prof.  Austin,  on  progress  in 
the  treatment  of  diseases,  348. 

Flour,  displacement  of  labor  in  manu- 
facture of,  52 ;  labor,  cost  of,  under 
modern  conditions,  58 ;  low  cost  of 
ocean  transportation,  165;  manu- 
facture, new  conditiona  of,  101. 

Flour-mills  and  bakeries,  consolida- 
tion of,  101. 

Food,  equalization  of  prices  and  sup- 
ply, 835 ;  increase  in  variety  avail- 
able, 839 ;  reduction  in  the  cost  of, 
258. 

Foods,  increase  in  consumption  of,  in 
the  United  States,  880. 


Forces,  controlling  business  life,  349. 

France,  commercial  antagonism  with  21  /  " 
Italy,  274;  decline  of  land-value 
in,  424 ;  depression  of  agriculture 
in,  177 ;  depression  of  industry  in 
1883-' 88,  9  ;  exemplification  of  the 
Malthusian  theory  in,  333 ;  experi- 
ence with  shipping  bounties,  310 ; 
food  experiences  in  the  eighteenth 
century,  71 ;  indemnity  paid  to  Ger- 
many, 226 ;  monetary  condition  of, 
215 ;  slow  increment  of  popula- 
tion in,  333 ;  statistics  of  wages  in, 
410 ;  taxation  in,  24. 

Freedom,  commercial,  curious  illus- 
tration of  the  benefits  of,  49  ;  effect 
of,  on  the  masses,  363. 

Freight  rates,  great  reductions  on 
American  railroads,  40. 

Freights,  ocean,  reduction  of,  38;  rail- 
roads, average  rates  in  the  United 
States,  1883-'87,  164 ;  railroad,  de- 
cline in  rates  of,  164 ;  recent  price, 
experiences  of,  163, 164. 

Frenchmen,  frugality  of,  833. 

French  sugar  bounties,  129. 

Gain,  greatest,  that  has  accrued  to  the 
the  masses,  444. 

Gas,  natural,  use  of,  56;  relation  of 
consumption  to  price,  382 ;  water- 
oil,  advantages  of,  57. 

Georgia,  decline  in  the  value  of  land, 
426. 

German  Empire,  comparative  indus- 
trial results  in,  62. 

Germany,  concentration  of  banking  in- 
terests in,  99 ;  experience  with  sugar 
bounties,  129 ;  financial  and  indus- 
trial depression  in,  in  1873,  4;  gold 
and  silver  bank  reserves,  211 ;  mon- 
etary system,  change  in,  224,  225 ; 
in  1873, 225 ;  old  coinage  of,  228 ;  re- 
cent social  changes  in,  404 ;  savings- 
banks  in,  212 ;  state  regulation  of  in- 
dustries, 282;  Sunday  labor  in,  269. 

Gibbs,  Mr.  H.  II.,  on  the  formation 
of  prices,  125. 


484: 


RECENT  ECONOMIC  CHANGES. 


Giffen,  Robert,  economic  investiga- 
tions of,  119, 152, 166,  341,  358,  361. 

Gilchrist-Thomas  steel  process,  43. 

Glass-making,  American,  wages  in, 
871. 

Gold  and  prices,  123. 

Gold  and  Silver  Commission,  British 
report  of,  189, 190. 

Gold  and  silver  unlike  other  com- 
modities, 217. 

Gold,  monetary  stock  of,  208 ;  present 
annual  production  of,  210  ;  relation 
^  to  British  exports  and  imports,  2^; 
saturation-point  of,  in  exchanges, 
254 ;  scarcity  theory,  205-208 ;  sta- 
bility in  cost  of  production,  256  ; 
two  functions  of,  220 ;  world's  an- 
nual product  of,  207,  208. 

Government  relations  to  national  life 
in  Great  Britain,  360. 

Grain-cradle,  results  of  invention  of, 
334. 

Grain,  local  differences  in  European 
prices,  46 ;  variations  in  prices  of, 
in  the  seventeenth  century,  46. 

Grancey,  M.  de,  study  of  Ireland,  377. 

Great  Britain,  co-operative  societies 
of,  103 ;  cotton-manufacturing  in- 
dustry of,  in  1888,  184;  monopoly 
of  tin-plate  manufacture,  146 ;  na- 
tional income  of,  357  ;  present  con- 
ditions of  wheat-supply,  49 ;  rela- 
tions of  government  to  national  life, 
360 ;  statistics  of  income-taxes  in, 
354. 

Grosvenor,  William  M.,  on  changes 
in  prices,  411.  |  \  *j , 

Guild  system  of  the  middle  ages,  re- 
vival of,  281. 

Handicraft  products,  recent  price  ex- 
periences of,  191. 

Handicrafts,  destruction  of,  96. 

Hand-labor  occupations,  permanent 
condition  of,  68. 

Hemps,  Manila  and  Sisal,  prices  of, 
204. 


Hides,  decline  in  prices  of,  198. 
History,    extraordinary    commercial, 

277 ;  place  in,  of  the  period  from 

1860  to  1885,  27. 
Hog-products  of  the  United  States, 

decline  in  export  of,  317. 
Holland  and  the  silver  question,  249. 
Hops,  recent  price  experiences  of,  195. 
Horse-flesh,     consumption     of,     in 

France,  449. 

Hours  of  labor,  414,  415. 
House-decorative  industries,  388. 
Human    race,    increased   power    of, 

through  railroad  agencies,  41. 

Illinois,  decline  in  land-values  in,  426. 

Illiteracy,  decline  of,  in  Great  Britain, 
360. 

Immigration,  restrictions  on,  285. 

Index-number  system  of  prices,  120. 

India,  British  exports  to,  240 ;  In- 
dia Council  bills,  influence  of,  on 
price  of  silver,  229 ;  increased  ex- 
ports of,  240 ;  Malthusian  theory 
exemplified  in,  331 ;  new  indus- 
tries of,  243 ;  periodical  famines 
in,  331 ;  population  of,  332 ;  prod- 
uce, recent  change  in  the  condi- 
tions of  distribution,  31 ;  produc- 
tion of  tea  in,  153 ;  railroad  system 
of,  171 ;  reduction  of  length  of  voy- 
age to  and  from,  since  1869,  29 ; 
stability  of  prices  in,  193;  sugar 
production  of,  305;  wheat  produc- 
tion of,  168. 

Individualism  of  machinery  operatives, 
93. 

Indo-China,  commercial  experience  of, 
276. 

Industrial  depression  in  England,  18 ; 
recognition  of  a  universal  cause  of, 
25 ;  since  1883,  relative  severity  of, 
in  different  countries,  3 ;  specula- 
tion as  to  causes,  19,  22. 

Industrial  development,  modern  ra- 
pidity of,  63. 

Industrial  expansion  of  Germany,  62. 


INDEX. 


485 


Industrial  over-production,  73,  74. 
Industries,  iron  and  steel,  of  the  United 

States,  318 ;  extinction  of  certain, 

54,55. 
Industry,    artificial,    failure    of,    in 

Europe,  290. 
Inflation  of  business  prior  to  1873, 

3. 

Intelligence  as  an  element  of  discon- 
tent, 40L 

Interest,  reduction  in  rates  of,  421. 
International   balances,  economy    in 

settling,  213. 
Inventions,  destructive  influence  of, 

369;  of  the  future,  65. 
Ireland,  causes  of  discontent  in,  377, 

403. 


Iron  and  steel,  comparative  cost  in  the '  Slews,  business  peculiarities  of,  453. 


United  States  and  Great  Britain, 
320,  467 ;  effect  of  cheapening  on 
railroad  construction,  49 ;  enhanced 
cost  of,  in  the  United  States,  318, 
320. 

Iron, annual  consumption  in  theUnited 
States,  320,  469 ;  cause  of  recent  de- 
cline in  prices,  139 ;  comparative 
consumption  in  the  United  States 
and  Great  Britain,  818 ;  decline  in 
the  use  of  the  puddling  process,  141 ; 
industry  of  the  United  States,  capi- 
tal invested  in,  321,  478. 

Iron,  production  and  price -experi- 
ences, 137-140;  production  and 
prices  in  the  United  States  from 
1872  to  1889,  12-14  ;  prospective 
production,  392  ;  purchasing  power 
in  1865  and  1885,  221 ;  world's  con- 
sumption of,  898;  world's  produc- 
tion, 188. 

Iron,  pig,  increased  economy  and 
efficiency  of  production  of  since 
1860,  28 ;  increase  in  world's  prod- 
uct, 1870-1888,  49 ;  lowest  prices  in 
American  history,  12. 

Italian  agriculture,  how  affected  by 
the  Suez  Canal,  88. 

Italy,  commercial   antagonism   with 


France,  274 ;  depression  of  agricult- 
ure in,  78. 
Ivory,  increase  in  the  price  of,  195. 

Jails  of  Massachusetts,  cost  of  food- 
supply  for,  340. 

Jam  manufacture  in  Great  Britain, 
302. 

Japan,  agriculture  of,  332 ;  exemplifi- 
cation of  the  Malthusian  theory  in, 
332  ;  limits  of  population  in,  333. 

Java,  recent  calamities  of,  250. 

Jefferson's  opinion  on  the  results  of 
traveling,  403. 

Jewelry,  capital  invested  in  manufact- 
uring, 92 ;  economy  in  manufact- 
ure of,  52. 


Journalism,  recent  development  of, 

389. 
Jute,  recent  product  and  prices  of,  188. 


Knowledge,  itmueno(("'o»  increased, 

324. 
Krapotkin,  Prince,  on  the  division  of 

labor,  94. 

Labor  and  capital,  present  relations 
of,  91. 

Labor,  average  saving  of  labor  in  Eng- 
land since  1880,  29;  comparative 
efficiency  and  earnings  in  different 
countries,  410,  411  ;  decrease  of,  in 
the  management  of  vessels,  35  ;  dis- 
content of,  causes  for,  364  ;  displace- 
ment of,  by  machinery,  51,  364; 
division  of,  in  the  manufacture  of 
boots  and  shoes,  94  ;  efficiency  of,  in 
iron  production,  140;  extreme  di- 
vision of,  897  ;  foreign  contract  in 
the  United  States,  374;  grievances 
in  Europe,  375  ;  increased  efficiency 
in  cotton  manufacturing,  181  ;  in 
cotton  -  mills  of  the  United  States, 
60  ;  increased  productive  power  in 
coal-mining,  150  ;  reduction  of  hours 
by  legislation,  438  ;  Sunday,  in  Ger- 


480 


RECENT  ECONOMIC  CHANGES. 


many,  415 ;  tendency  for  transfer  to 
higher  grades,  390. 

Laborers,  in  Great  Britain,  improved 
condition  of,  355 ;  lowest,  change  in 
relative  numbers  of,  407 ;  manual, 
slow  advance  in  culture  of,  77. 

Land,  area  of  cultivated,  in  the  United 
States,  176 ;  decline  in  value  and  use 
in  France,  378 ;  decline  in  value  of, 
423;  fertile,  influence  on  material 
progress,  454. 

Lard,  supersedure  of  by  cotton-seed 
oil,  56. 

Latin  Union,  action  of,  in  relation  to 
silver,  227. 

Laundresses  of  Paris  demand  protec- 
tion, 281. 

\.  Law  of  the  use  of  metallic  money,  251. 
<  -v^\     Lead,  limited  uses  for,  148 ;   recent 
production  and  price-experiences  of, 
147;  world's  production  of,  148. 

Leather,  recent  decline  in  prices  of, 
198. 

Lexis,  Prof.,  on  recent  price  move- 
ments, 125. 

Life  assurance  in  Great  Britain,  359. 

Living,  reduction  in  the  cost  of,  337. 

Looms,  power,  displacement  of  labor 
by,  365. 

Losses,  occasioned  by  economic 
changes,  111. 

Luxuries,  increase  in  consumption  of, 


Machinery,  antagonism  with  machin- 
ery, 96 ;  counteraction  of  the  evils 
of  labor-displacement  by,  388 ;  dis- 
placement of  labor  by,  51 ;  eifect  of 
labor-saving,  on  wages,  371 ;  epoch 
of  efficient,  61 ;  evolutions  of  from 
labor  discontent,  327 ;  for  Panama 
Canal,  labor  power  of,  50 ;  influence 
of,  in  equalizing  wages,  105 ;  inten- 
sified influence  in  recent  years,  61 ; 
labor-saving,  stimulus  to  invention 
of,  68 ;  most  expensive  of  all  prod- 
ucts, 91. 


Mackerel,  recent  price-experiences  of, 
163. 

Madder,  destruction  of  the  business  of 
growing  and  preparing,  55. 

Maine,  purchasing  power  of  wages  in, 
412. 

Malthus's  views  on  population,  330. 

Man,  and  animals,  essential  difference 
between,  400 ;  change  in  condition 
of,  through  prices,  115. 

Manchester,  recent  commercial  policy 
of,  266. 

Mankind,  what  is  to  be  the  future  of, 
427 ;  recent  increase  in  control  of 
the  forces  of  Nature  by,  27. 

Manufactures,  tendency  to  consolida- 
tion, 96. 

Manufacturing,  modern  system  of,  93. 

Marines,  mercantile,  of  Europe,  811. 

Marriage-rate,  decline  of,  in  Europe, 
350. 

Maryland,  cost  of  living  in,  for  oper- 
atives, 340. 

Massachusetts,  apportionment  of  pop- 
ulation in,  352 ;  cost  of  dietary  for 
prisoners  in,  340. 

Masses,  greatest  accruing  gain  of  the, 
444. 

Matches,  increased  consumption 
through  exemption  from  taxation, 
384. 

Meat,  dressed,  restrictions  on  sale  of, 
in  the  United  States,  284 ;  frozen, 
extent  of  trade  in,  161 ;  improve- 
ments in  the  production  of,  339 ;  new 
sources  for  supply  of,  159. 

Meats,  cost  of  ocean  transport,  38 ;  re- 
cent price-experiences  of,  158. 

Mechanics,  practical,  imperfect  de- 
velopment of,  400. 

Medicine,  prospective  progress  in, 
348. 

Merchandise,  cost  of  transporting  in 
the  United  States,  164;  sales  by 
samples,  110. 

Metals,  precious,  change  in  relative 
values  of,  224;  inquiry  respecting 


INDEX. 


487 


changes  in  their  relative  values, 
189, 190 ;  reduction  in  the  price  of, 
259. 

Mexico,  silver  product  of,  235 ;  trade 
of,  how  affected  by  decline  in  sil- 
ver, 237. 

Middle-men,  disappearance  of,  107, 
110. 

Milk,  increase  in  product  of,  338. 

Millennium,  the,  not  an  economic  fac- 
tor, 895. 

Milling,  experience  in  the  United 
States,  79. 

Mills,  flour,  increased  cost  of,  101. 

Millstones,  discontinuance  of  use  of, 
55. 

Minnesota,  industrial  and  social  legis- 
lation of,  287. 

Money,  devices  for  economizing,  211 ; 
purchasing  power  in  England  at 
different  periods,  413 ;  use  of,  in  va- 
rious civilizations,  253. 

Money-order  postal  system,  216. 

Monopolies,  conditions  of  trade,  74. 

Mortality,  decline  in  rates  of,  347. 

Nail-trade  of  the  United  States,  79. 

Nations,  increasing  antagonism  of, 
285. 

Nature,  penalty  for  subordinating  her 
forces,  866. 

Netherlands,  industrial  depression  in 
the,1 265. 

New  England,  abandonment  of  farm 
properties  in,  852. 

Newfoundland,  economic  disturb- 
ances in,  88. 

New  Orleans,  battle  of,  837. 

New  York,  apportionment  of  popula- 
tion in,  852. 

New  Zealand,  cheese  product  of,  168 ; 
meat  product  of,  161. 

Nickel,  recent  price,  experiences  of, 
147 ;  increased  supplies  of,  147. 

Occupations,  increasing  diversity  of, 


Ocean-freights,  recent  experiences  of, 
165. 

Octroi  duties  in  France,  281. 

Ohio,  land-values  in,  426. 

Oil,  cotton-seed,  economic  influence 
of  discovery  of,  56 ;  mineral,  pro- 
duction and  price,  experiences  of, 
131 ;  Standard  Trust  Company,  132. 

Oils,  vegetable,  recent  price-experi- 
ences of,  159. 

Oleomargarine  legislation,  449. 

Operatives,  loss  of  independence 
through  machinery  conditions,  95. 

Operative,  work  of,  in  cotton-mills  of 
the  United  States  in  1840  and  1886, 
50. 

Opium,  recent  price  movements  of, 
199;  substitutive  use  of  quinine, 
394. 

Over-production,  definition  of,  25,  70. 

Panama  Canal,  power  of  machinery 
employed  in  excavating  the,  50. 

Panics,  periodicity  of,  80. 

Paper  bags,  economy  and  use  of,  53. 

Paper,  increase  in  the  manufacturing 
capacity  of  the  United  States,  54 ; 
recent  decline  in  prices  of,  155. 

Paris,  municipal  taxation  of,  24. 

Patagonia,  development  of,  455. 

Pauperism,  statistics  of,  344. 

Paupers,  modern  treatment  of,  414. 

Pessimistic  views  of  social  progress 
not  warranted,  324,  868. 

Petroleum,  recent  price  -  experiences 
of,  181. 

Phylloxera,  ravages  of,  in  France,  23. 

Pills,  manufacture,  by  machinery,  54 

Pius,  manufacture  of,  in  1676  and 
1888,  50. 

Plague,  extinction  of,  847. 

Poor,  are  they  growing  poorer?  418  ; 
British,  improvement  in  condition 
of,  857;  destruction  of,  through  pov- 
erty, 453 ;  of  England  forty  years 
ago,  402 ;  of  London,  876. 

Population,   annual    movements   of, 


488 


RECENT  ECONOMIC  CHANGES. 


401 ;  effect  of  labor-saving  ma- 
chinery on,  373  ;  existing,  of  Great 
Britain,  not  possible  a  hundred 
years  ago,  330;  rural,  of  France, 
352 ;  sparse,  relation  to  wages,  343  ; 
unemployed,  statistics  of,  435. 

Portugal,  economic  situation  of,  in 
1887-'88,  10. 

Postage,  effect  of  reduction  of,  in  the 
United  States,  383. 

Postal-money,  use  of,  216. 

Postal  savings-banks,  342. 

Postal  statistics,  economic  teachings 
of,  389. 

Poverty,  new  factors  in  the  problem 
of,  435 ;  the  destruction  of  the  poor, 
.453. 

Price,  meaning  of  the  term,  207 ;  re- 
lation to  consumption,  379. 

Prices,  American,  general  average  in 
1860  and  1885,  119;  average,  from 
1849  to  1885, 116 ;  calculation  of,  by 
the  "index"  system,  120;  cause  of 
recent  decline  in,  123 ;  curious  cause 
of  depression  in,  73 ;  desirability  of 
high,  447 ;  effect  of  fluctuations  of, 
on  business,  115 ;  effect  of  railroads 
and  steamships  on,  46 ;  enhance- 
ment of  retail,  450 ;  exceptional 
changes  in,  194;  factors  occasioning 
decline  in,  202 ;  formation  of,  on 
•what  depends,  124 ;  in  England  in 
1872,  4 ;  in  semi-civilized  countries, 
103 ;  in  the  days  of  Abraham,  115 ; 
is  decline  of,  an  evil  I  250 ;  not 
regulated  by  statutes,  75 ;  periodical 
changes  in,  not  due  to  natural  laws, 
83 ;  permanent  decline  of,  in  case  of 
commodities,  188 ;  phenomenal  re- 
duction of,  257 ;  recent  depression 
of,  114;  relation  of,  to  volume  of 
circulating  medium,  222 ;  retail, 
recent  price -experiences  of,  192; 
two  fundamental  causes  influencing, 
124. 

Print-cloths,  increased  power  of  pro- 
duction of,  28. 


Product,  law  of  division  of,  between 
capital  and  labor,  370. 

Production,  anarchy  of,  379 ;  average 
increase  in  the  power  of,  in  recent 
years,  28 ;  concentration  of,  a  neces- 
sity, 98 ;  economic  conditions  of 
new  methods,  73 ;  examples  of  ex- 
cessive, 71 ;  modern  conditions  for 
economic,  96 ;  relations  to  consump- 
tion, 330. 

Production  and  distribution,  new 
conditions  of,  28 ;  recent  saving  of 
time  and  labor  in,  28. 

Products,  changes  in  the  methods  of 
distribution  of,  106. 

Profits,  destruction  of,  by  excessive 
production,  78  ;  great  reduction  of, 
in  business,  107 ;  reduction  of,  un- 
der modern  conditions,  255,  418. 

Property,  conditions  of  transmission 
of,  352;  destroyed  by  civilization, 
369 ;  small  accumulation  of,  by  the 
masses,  445. 

Prophecies,  Benner's,  81. 

Protective  duties,  recent  influence  of, 
on  European  commerce,  292. 

Prussia,  statistics  of  savings-banks  in, 
343. 

Purchasing  power  of  the  people,  in 
what  consists,  215. 

Quicksilver,  production  and  price  ex- 
periences of,  144. 

Quinine,  economic  experiences  of,  153, 
395 ;  increased  consumption  contin- 
gent on  reduction  of  price,  85 ;  new 
sources  of  supply  of,  154, 155. 

Rags,  recent  decline  in  prices  of,  155 ; 
substitutes  for,  in  paper-making, 
155. 

Railroad  construction,  numbers  em- 
ployed in,  336 ;  recent  reduction  in 
the  cost  of,  49. 

Railroad  freight  service  of  the  United 
States,  cost  of,  in  1887,  41.  a 

Railroad,  Illinois  Central,  relation  of 


INDEX. 


489 


wages  to  cost  of  service,  372 ;  serv- 
ice, world's  distribution  of,  42 ; 
system  of  the  world,  equivalent 
work  of,  in  1885,  41  ;  mileage, 
world's,  in  1889,  41. 

Railroads,  American,  average  freight 
charges  of,  40 ;  comparatively  re- 
cent use  of,  42 ;  tendency  of,  to  con- 
solidate, 96. 

Railway  system  of  India,  171. 

Railways,  rapid  development  of,  in 
India,  171. 

Eeforms,  industrial,  in  Great  Britain, 
399. 

Rent,  as  a  cause  of  social  distress, 
451 ;  increase  in  expenditures  for, 
413. 

Rents,  house,  stability  of  rates  for, 
192. 

Retail  and  wholesale  prices,  inequality 
of,  450. 

Retail  trade,  revolution  of,  109. 

Rich,  are  they  growing  richer  ?  418. 

Roller -process  for  grinding  wheat, 
100. 

Rougham,  English  village  of,  in  the 
time  of  Henry  HI,  402. 

Roumania,  tariff  legislation  of,  277. 

Routine,  subordination  to,  in  all  sys- 
tematized employments,  396. 

Rupee  of  India,  purchasing  power  of, 
245. 

Russia,  abandonment  of  land  by  peas- 
antry, 10 ;  civil  society  in,  829  ; 
grain-harvest  of  1888,  48 ;  recent 
commercial  policy  of,  264;  sugar 
bounties  in,  129 ;  trade  depression 
in,  10. 

Sail-cloth,  diminished  manufacture 
and  use  of,  56. 

Sailing-vessels,  decrease  in  number 
and  use,  39. 

Saltpeter,  decline  in  price  of,  156, 
158. 

Suit-trust,  influence  on  prices  of  chem- 
icals, 158. 


Sandwich  Islands,  sugar  product  of, 

800. 

Sanitary  reform,  results  of,  347. 
Sarsaparilla,  prices  of,  193. 
Sauerbeck,  M.,  on  recent  price-experi- 
ences, 116, 122. 
Savings-bank  deposits  in    England, 

342 ;    Europe,    342 ;    the    United 

States,  342 ; 
Savings-banks  of  Germany,  212 ;  of 

Massachusetts,  rates  of  interest  in, 

421 ;  statistics  of,  342,  344. 
Saxony,  employment  of  children  in, 

95 ;  hand-loom  weavers  of,  368. 
Schools,  British,  poor-law  union,  ex- 
tinction of  children's  diseases  in, 

848;    public   free,  in    the    United  . 

Kingdom,  359. 
Sea,  as  a  source  of  food,  339 ;  carriage,       y  $ ' 

recent  cheapening  of,  36. 
Seal-fishery  of  Newfoundland,changes 

in,  39. 
Securities,  moneyed,  rates  of  interest 

on,  422. 
Self-denial,  economic  illustration  of, 

405. 

Servitude,  natural,  445. 
Sheep,  recent  increase  of,  160. 
"  She-towns,"  95. 
Ship-building,  effect  of  excessive,  on 

freight  charges,  165. 
Shipping  statistics  of  Great  Britain, 

318. 

Shoddy,  use  of,  187. 
Shoemaking,)  industrial   experiences 

of,  397.   rj9*9f<-4Y-zir 

Shoes,  division  of  labor  in  the  manu- 
facture of,  T»»>  /  ** 

Siemens'  tank  -  furnace,  industrial 
economy  of,  52.  i  d***.  &  ,</60  v 

Silk,  adulterations  of,  188 ;  product 
and  prices  of,  188. 

Silver  and  India  wheat,  244,  246, 
248. 

Silver,  bar,  prices  from  1878  to  1888. 

Silver,  bullion,  price  from  1865  to 
1873  ;  decline  in  price  of,  144;  pro- 


490 


RECENT  ECONOMIC  CHANGES. 


duction  of,  144, 210 ;  increase  in  the 
product  and  use  of,  232;  lowest 
price  of,  22T ;  possible  future  value 
of,  459 ;  sales  of,  by  Germany, 
226,  227;  unstable  equilibrium  of, 
229. 

Smith,  Adam,  description  of  the  pin 
^-j      manufacture  in  1776,  60. 

Socialism,  definition  of,  405. 

Societary  changes,  a  factor  of  discon- 
!  2  P .          tent,  404. 

Society,  civil,  Tolstoi's  views  on,  329 ; 
highest  honors  of,  369 ; .  human, 
what  constitutes  ?  430 ;  modern,  com- 
plex character  of,  466. 

Soda,  nitrate  of,  recent  price-experi- 
ences of,  156. 

Soetbeer's  tables  of  prices,  200. 

Soil,  abandonment  of  cultivation  of, 
352,  353. 

Spain,  commercial  policy  of,  265 ;  eco- 
nomic condition  of,  10. 

Speculation,  reduction  of  the  elements 
of,  82. 

Spices,  increased  consumption  in  the 
United  States,  384. 

Spindles,  cotton,  increase  in  revolution 
of,  204. 

Spirits,  distilled,  decline  in  British 
consumption,  361. 

Standard   of   value,    preference    for  j 
a  single,  257. 

Statistics,  the  foundation  for  economic 
reasoning,  327. 

Statute  enactments,  powerless  to  ar- 
rest industrial  transitions,  366. 

Steam-engine,  future  entire  displace- 
ment of,  65. 

Steam-engines  of  the  world,  horse  and 
man  power  of,  44. 

Steamers,  ocean,  comparative  efficien- 
cy of,  before  and  after  1875,  37; 
screw,  modern  equipment  and  cost 
of,  37. 

Steel,  Bessemer,  durability  of,  141 ; 
value  of  discovery  of,  43 ;  compara- 
tive price  in  the  United  States  and 


Great  Britain,  818 ;  consumption 
of,  in  the  United  States,  320 ;  sub- 
stitution of,  in  place  of  iron,  44, 
140. 

Stocking-loom,  story  of  invention  and 
use,  366. 

Strikes,  influence  on  the  invention 
and  use  of  labor-saving  machinery, 
68. 

Stuttgart,  Chamber  of  Commerce,  re- 
port on  trade,  292. 

Suez  Canal,  economic  effect  of  its  con- 
struction, 29. 

Sugar,  beet-root,  artificial  stimulus  to 
production  of,  296-298;  bounties, 
evils  of,  302 ;  comparative  consump- 
tion by  different  countries,  308; 
conference,  "  international,"  306, 
307;  decline  in  price,  1880-1887, 
126 ;  effect  of  bounties  on  produc- 
tion and  price,  126;  increase  in 
production  of,  128;  modern  planta- 
tion production  of,  102;  multiple 
uses  of,  301;  peculiarities  of  con- 
sumption in  the  United  States,  387 ; 
production  of  the  world,  128 ;  profit 
in  refining,  92 ;  refining,  magnitude 
of  capital  invested  in,  92 ;  Sandwich 
Islands  product,  300;  small  profit 
in  refining,  98. 

Suicide,  increase  of,  350 ;  statistics  of, 
350. 

Sunday  labor,  269. 

Surgery,  prospective  advances  in, 
348. 

Swank,  James  M.,  report  on  the 
iron  and  steel  industries  of  the 
United  States,  318,  467. 

Tallow,  recent  decline  in  prices  of, 
159. 

Tariff,  protective,  influence  of,  in  Ger- 
many, 294 ;  recent  French,  278. 

Tariffs  of  Continental  Europe,  270, 
273;  taxes  on  iron  and  steel  im- 
ports into  the  United  States,  322. 

Taxation,   burden  of   indirect,  321; 


INDEX. 


491 


illustrations  of  increased  consump- 
tion contingent  on  reduction  of, 
384,  385 ;  indirect,  burden  of,  318. 

Taxes,  incidents  of  indirect,  illus- 
tration of,  318 ;  on  food,  448 ;  on 
iron  and  steel  in  the  United  States, 
321,  467. 

Tea,  importation,  changes  in  methods 
of,  107 ;  increased  consumption  in 
Great  Britain,  contingent  on  tax 
reductions,  384;  recent  production 
and  price,  experiences  of,  153, 

Teachers,  increased  opportunity  for 
employment  of,  388. 

Telegraph,  influence  of,  on  the  con- 
ditions of  business,  32;  rates,  re- 
cent reductions  in,  166. 

Telegraphy,  future  wider  utilization 
of,  66. 

Telephone,  creation  of  employments 
by,  387  ;  future  utilization  of,  66. 

Textile  manufactures,  division  of  la- 
bor in,  95. 

Time,  economic  advantages  from  the 
saving  of,  445. 

Tin,  production  and  price-experiences 
of,  145. 

Tin-man,  changes  in  his  business, 
107. 

Tin-plate,  economy  in  the  manufact- 
ure of,  108. 

Tin-plates,  improvements  in  manu- 
facture of,  146;  production  and 
price-experiences  of,  106,  146. 

Tobacco,  increase  in  consumption  of, 
838. 

Tolstoi's  views  on  civil  society,  829. 

Tolu,  balsam,  production,  prices,  and 
uses  of,  199. 

Tonnage,  ocean,  over-supply  of,  168 ; 
statistics  of  British,  85. 

Towns,  movement  of  population  to- 
ward, 353. 

Trade,  changes  in,  through  the  agency 
of  the  telegraph,  82 ;  depression  of, 
since  1873,  1 ;  emancipation  of, 
from  restrictions,  261 ;  European, 


rapid  development  under  commer- 
cial freedom,  263 ;  experiences  from 
1872  to  1886,  15,  18;  foreign,  of 
Europe,  recent  changes  in,  288,  289 ; 
governmental  interference  with, 
260 :  illustrations  of  the  smoothness 
of,  under  natural  conditions,  47 ; 
increase  in  the  occupation  of,  351 ; 
influence  of  fluctuating  paper 
money  on,  239 ;  international  con- 
ditions of,  247 ;  monopolization  of, 
97 ;  of  the  world,  how  carried  on, 
217 ;  restrictions,  logical  results  of, 
280 ;  retail,  changes  in,  109 ;  volume 
of,  not  contracted  by  depression  in 
prices,  82. 

Transportation,  effect  of  reduction  of 
cost  of,  460. 

Travel,  educating  influences  of,  401. 

Treaty,  Anglo-French,  of  1860,  261, 
262. 

Trinidad,  restrictive  tariff  of,  265 ; 
small  retail  purchases  in,  253. 

Trusts,  formation  and  extension  of, 
294 ;  origin  of,  74 ;  problem  of,  75, 
76. 

Trust,  Standard  Oil,  132. 

United  Kingdom,  daily  exchanges 
through  clearing-houses,  214 ;  in- 
crease in  specific  productions,  376. 

United  States,  annual  increase  of  busi- 
ness in,  85 ;  conditions  of  existence 
in,  837 ;  curious  monetary  experi- 
ence of,  221 ;  decline  of  its  mercan- 
tile marine,  314 ;  financial  crisis  in 
1873,  5 ;  gold  stock  per  capita,  215 ; 
idle  population  of,  in  1885, 18  ;  illus- 
tration of  depression  of  business  in 
1884-'85,  9 ;  increased  tariff  rates 
of,  278 ;  movement  in  1854  for  free- 
dom of  trade,  261 ;  pauperism  in, 
844;  production  and  consumption 
of  paper  in,  155 ;  railroad  freight 
transportation  of,  in  1887,  41 ;  re- 
cent advance  of  wages  in,  408 ;  re- 
lation of  the  silver  dollar  to  its 


492 


RECENT  ECONOMIC   CHANGES. 


coinage  system,  227 ;  relative  ex- 
ports of,  178 ;  sugar  bounties  in, 
300 ;  the  world's  disturbing  factor, 
454 ;  use  of  shoddy  in,  187. 

Value-perceiving  faculty,  453. 
Value,  preference  for  single  standard 

of,  257. 
Vessel,  sailing,  disappearance  of  the, 

39. 
Vessels,  economy  of  construction  and 

management    of,    85 ;    large,     99 ; 

small,  unfltness  for  cheap  trans- 
portation, 99. 

Victoria,  colony,  wealth  of,  455. 
Vineyards,  destruction  of,  by  disease, 

in  France,  23. 
Volume  of  circulating  media,  does  it 

control  prices  ?  222. 

Wages,  advances  in  rates  of,  406  ;  com- 
parative advance  of,  in  England, 
France,  and  the  United  States,  408 ; 
curious  use  of  high,  77 ;  equaliza- 
tion of,  in  different  countries,  105 ; 
highest,  where  paid,  362 ;  influence 
of  machinery  on,  437 ;  in  the  iron- 
furnaces  of  the  United  States,  321 ; 
of  cotton-mill  operatives  in  Rhode 
Island  in  1840  and  1886,  50;  on 
wheat-farms  in  the  United  States 
and  Prussia,  59 ;  proportion  enter- 
ing into  the  cost  of  pins,  60 ;  rela- 
tion to  the  cost  of  living,  404 ;  rise 
of,  concurrent  with  the  fall  in  prices 
of  commodities,  417 ;  source  of  pay- 
ment, 417 ;  their  relation  to  money, 
253. 

Wages  and  machinery,  371-378. 

Walker,  Joseph  H.,  investigations  in 
respect  to  business  success,  352. 

Wants,  creation  of  new,  389. 

War  expenditures,  322. 

War,  Franco-German,  economic  re- 
sults of,  268. 

Wars,  contrast  between  ancient  and 
modern,  323. 


Watches,  American  manufacture  of, 
383. 

Wealth,  accumulation  dependent  on 
value  -  perceiving  faculty,  453  j 
equalization  of,  in  Great  Britain, 
358 ;  influence  of  protective  tariffs 
on  the  distribution  of,  294;  muta- 
bility of,  352. 

Wealth  of  France,  354 ;  Great  Britain, 
354. 

Wealth  of  Great  Britain,  changes  in 
items  of,  423. 

Wealth  of  the  United  States,  384. 

Western  Union  Telegraph  Company, 
work  of,  in  1887-' 88,  67. 

West  Indies,  recent  experience  in 
sugar  production,  130 ;  sugar  prod- 
uct of,  301. 

Whalebone,  increase  in  price  of, 
195. 

Wheat,  acreage,  recent  reduction  in 
Great  Britain,  88;  American,  re- 
duction of  export  prices  of,  89 ; 
American,  variations  in  price  from 
1879-' 81,  7 ;  comparative  cost  of 
growing  under  different  conditions, 
98;  exhaustion  of  value  by  trans- 
portation, 334;  extraordinary  ex- 
portations  of  the  United  States  in 
1879-'81,  6 ;  future  supply  of,  176 ; 
Indian,  cause  of  increased  supply, 
244 ;  labor  cost  of,  in  Dakota,  57  ; 
lowest  recorded  price  of,  167 ; 
movements  and  prices  in  1888,  47 ; 
over-production  of,  173  ;  phenome- 
nal decline  in,  175 ;  price  increased 
by  taxation,  448 ;  product  of  Eu- 
rope, 179 ;  of  the  United  States, 
169  ;  recent  price  -  experiences  of, 
166-176. 

Women,  employment  in  textile  in- 
dustries, 398 ;  increased  opportuni- 
ties for  employment,  336. 

Woolen  industry  of  Ireland,  condi- 
tion of,  373. 

Wool,  production  and  prices  of,  184, 
187. 


INDEX. 


493 


Wool-prices,  how  influenced  by  the 
use  of  shoddy,  187. 

Wools,  Australian,  decline  in  the 
prices  of,  188. 

Work,  average  daily  hours  of,  in  1860, 
415  ;  limitation  by  statute,  438. 

Work  breeds  work,  394. 

Workingmen,  increase  in  the  com- 
forts of,  77. 


World,  aggregate  capital  of,  217  ; 
trade  of,  how  carried  on,  217  ; 
what  it  did  not  have  fifty  years 
ago,  64. 


Zollverein,  German  trade,  conditions 
of,  in  1870,  262;  proposed  Euro- 
pean, 295. 


THE  END. 


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"  The  Rear-Guard  of  the  Revolution  "  is  a  narrative  of  the  adventures  of  the 
pioneers  that  first  crossed  the  Alleghanies  and  settled  in  what  is  now  Tennessee,  under 
the  leadership  of  two  remarkable  men,  James  Robertson  and  John  Sevier.  The  title 
of  the  book  is  derived  from  the  fact  that  a  body  of  hardy  volunteers,  under  the  leader- 
ship of  Sevier,  crossed  the  mountains,  and  by  their  timely  arrival  secured  the  defeat 
of  the  British  army  at  King's  Mountain. 


J 


OHN  SEVIER  AS  A  COMMONWEALTH- 
BUILDER.  A  Sequel  to  "The  Rear-Guard  of  the  Revo- 
lution." By  JAMES  R.  GILMORE  (Edmund  Kirke).  I2mo. 
Cloth,  $1.50. 

John  Sevier  was  among  the  pioneers  who  settled  the  region  in  Eastern  Tennessee. 
He  was  the  founder  of  the  State  of  Franklin,  which  afterward  became  Tennessee,  and 
was  the  first  Governor  of  the  State.  His  innumerable  battles  with  the  Indians,  his  re- 
markable exploits,  his  address  and  genius  for  leadership,  render  his  career  one  of  the 
most  thrilling  and  interesting  on  record. 


T 


ADVANCE-GUARD  OF  WESTERN 
CIVILIZA  TION.  By  JAMES  R.  GILMORE  (Edmund  Kirke). 
With  Map,  and  Portrait  of  James  Robertson.  I2mo.  Cloth,  $1.50. 

This  work  is  in  a  measure  a  continuation  of  the  thrilling  story  told  by  the  author  in 
his  two  preceding  volumes,  "  The  Rear-Guard  of  the  Revolution  "  and  "John  Sevier 
as  a  Commonwealth-Builder."  The  three  volumes  together  cover,  says  the  author 
in  his  preface,  "  a  neglected  period  of  American  history,  and  they  disclose  facts  well 
worthy  the  attention  of  historians  —  namely,  that  these  Western  men  turned  the  tide 
of  the  American  Revolution,  and  subsequently  saved  the  newly-formed  Union  from 
disruption,  and  thereby  made  possible  our  present  great  republic." 


TWO  SPIES:  Nathan  Hale  and  John  AndrS. 
By  BENSON  J.  LOSSING,  LL.  D.  Illustrated  with  Pen-and-ink 
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New  York  :  D.  APPLETON  &  CO.,  I,  3,  &  5  Bond  Street. 


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L 


IFE  OF  THE  GREEKS  AND  ROMANS,  de- 
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T 


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trained  cultivator  in  that  his  skill  in  garden  practice  is  guided  by  a  refined  aesthetic 
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/JPPLETONS'   STUDENTS1  LIBRARY.     Con- 

•**•    sisting  of  Thirty-four  Volumes  on  subjects  in  Science,  History, 

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SHAKSPERE.     By  E.  DOWDEN. 
ENGLISH  LITERATURE.      By  S.  A. 

BROOKE. 

GREEK  LITERATURE.  By  R.  C.  JEBB. 
PHILOLOGY.    By  J.  PEILE. 
ENGLISH     COMPOSITION.       By    J. 

NICHOL. 

GEOGRAPHY.    By  G.  GROVE. 
CLASSICAL  GEOGRAPHY.    By  H.  F. 

TOZER. 

INTRODUCTION   TO  SCIENCE   PRIM- 
ERS.   By  T.  H.  HUXLEY. 
PHYSIOLOGY.     By  M.  FORSTER. 
CHEMISTRY.     By  H.  E.  ROSCOE. 
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HISTORY  OF  ROME.    By  M.  CREIGH- 

TON. 

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APOLOGISTS.     By  Rev.  G.  A.  JACKSON. 
THE  FATHERS  OF  THE  THIRD  CENTURY. 

By  Rev.  G.  A.  JACKSON. 
THOMAS  CARLYLE:    His  Life,  his  Books, 

his  Theories.     By  A.  H.  GUERNSEY. 
RALPH    WALDO    EMERSON,    Philosopher 

and  Poet.     By  A.  H.  GUERNSEY. 
MACAULAY:   His  Life,  his  Writings.     By 
•  C.  H.  JONES. 
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C.  H.  JONES. 
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JONES. 

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BENJAMIN. 
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G.  T.  FERRIS. 

THE  GREAT  ITALIAN  AND  FRENCH  COM- 
POSERS.   By  G.  T.  FERRIS. 
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T.  FERRIS. 
GREAT  SINGERS.    Second  Series.    By  G. 

T.  FERRIS. 
GREAT  VIOLINISTS  AND  PIANISTS.      By 

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and  its  People.  Life  and  Manners.  The  Emperor  of  Brazil.  Tijuca — Pedra  Bp- 
nita.  Situation,  Resources,  and  Climate.  American-Brazilian  Relations.  A  Trip 
Into  the  Interior.  Visit  to  a  Coffee-Plantation.  Public  Instruction.  Local  Ad- 
ministration. Parliamentary  Government.  Brazilian  Literature.  Agriculture 
and  Stock-raising.  The  Amazon  Valley.  Beasts  of  Prey.  Slavery  and  Emanci- 
pation. The  .Religious  Orders.  Public  Lands  and  Immigration. 

"  I  hope  I  may  be  able  to  present  some  facts  in  respect  to  the  present  situation 
of  Brazil  which  will  be  both  instructive  and  entertaining  to  general  readers.  My 
means  of  acquaintance  with  that  empire  are  principally  derived  from  a  residence 
of  three  years  at  Rio  de  Janeiro,  its  capital,  while  employed  in  the  service  of  the 
United  States  Government,  during  which  period  I  made  a  few  journeys  into  the 
interior."— From  the  Preface. 

A  STUDY   OF    MEXICO.     By  DAVID  A.  WELLS,  LL.  D.,  D.  C.  L. 

12mo.     Cloth,  $1.00;  paper  cover,  50  cents. 

"  Mr.  Wells's  showing  is  extremely  interesting,  and  its  value  is  great.  Nothing 
like  it  has  been  published  in  many  years."— New  York  Times. 

"  Mr.  Wells  sketches  broadly  but  in  firm  lines  Mexico's  physical  geography, 
her  race  inheritance,  political  history,  social  condition,  and  present  government." 
—New  York  Evening  Post. 

"  Several  efforts  have  been  made  to  satisfy  the  growing  desire  for  information 
relating  to  Mexico  since  that  country  has  become  connected  by  railways  with  the 
United  States.  But  we  have  seen  no  book  upon  ths  subject  by  an  American 
writer  which  is  BO  satisfactory  on  the  score  of  knowledge  and  trustworthiness 
as  '  A  Study  of  Mexico,'  by  David  A.  Wells."— New  York  Sun. 

IN  THE  BRUSH;  OR,  OLD-TIME  SOCIAL  AND  POLITICAL 
LIFE  IN  THE  SOUTHWEST.  By  H.  W.  PIERSON,  D.  D.  With 
Illustrations  by  W.  L.  Sheppard.  16mo.  Cloth,  $1.50.  New  cheap 
edition,  paper,  50  cents. 

"  It  has  peculiar  attractions  in  its  literary  methods,  its  rich  and  quiet  humor, 
»nd  the  genial  spirit  of  its  author."  —  The  Critic. 

New  York:   D.   APPLETON   &  CO.,    1,  3,  &  5  Bond  Street. 


1210 


Date  Due 


-  9  1990 


FFF 


Q  4  1990  ^ 


Library  Bureau  Cat.  No.  1137 


074  769    9 


